Accounting

In the past decade, several lawsuits have come up against auditing firms, for conducting their duties unprofessionally. It is common knowledge that Arthur Andersen was the audit firm that had for a long time been responsible for auditing Enrons books. As soon as Andersen learnt that the Securities and Exchange Commission had the intention of investigating Enron, it gave instructions to destroy the information that would be incriminating. This paper seeks to evaluate the case against Andersen, and offer an opinion regarding the courts decision. It will also offer an opinion regarding what Andersen would have done to prevent such a situation.

A Case against Andersen
As already mentioned, Andersen had been taken to court by the government of the United States in 2002, for alleged obstruction of duty, by organizing the destruction of information surrounding the collapse of Enron. In this case, Andersen lost, and with the loss came that of the license to practice as a CPA (Moore and Crampton, 2000). However, Andersen appealed in the Court of Appeal, where it still lost. Andersen felt unsatisfied with the decision, and thus moved to the Supreme Court, where the case against them was unanimously reversed in 2005. It was asserted that no evidence was presented to support the claim of obstruction (Legal Information Institute, 2005).

This decision by the courts was totally unacceptable because, considering the loss that had been suffered by investors due to the failure by Andersen to accurately advise them, a tougher measure should have been taken, rather than absolving them of wrong doing. Andersen, on its part, was ethically and indeed legally, required to provide information to the public regarding the real state of Enron, which it did not.

Rather than throwing this case out, the Supreme Court should have demanded more information in order to judge accordingly. The fact that there was insufficient information in the previous ruling does not mean that there was no information at all, or even eliminate wrong doing on the part of Andersen. This case was of such a great magnitude that more time should have been assigned to it. Andersen should have been punished in order to deter other auditing firms from knowingly interfering with information.