Arthur Andersen Research Paper

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Over the years, many companies have decided to abandon ethical practices in lieu of higher profits. Because of the high value placed on profits in America, many companies have taken extreme measures to increase profits and increase payouts to shareholders. Arthur Andersen LLP is a prime example of how business executives have been willing to make unethical business decisions in order to please clients and gain an edge on the competition. In the short run, these unethical decisions may have seemed beneficial, but in the long run, the extended consequences of this behavior were not worth any anticipated gain. Arthur Andersen made many unethical business decisions in lieu of higher profits that had drastic consequences which extended father than …show more content…

Arthur Andersen was orphaned at age sixteen and studied accounting at Northwestern University (Arthur, 2006). When Andersen was twenty-eight years old he purchased the Audit Company with his business partner, Clarence M. DeLany (Arthur, 2006). DeLaney left the business in 1918 and the firm changed its name to Arthur Andersen & Co. Anderson was known as a very ethical businessman and accountant, and he ran the business under the motto of “think straight and talk straight” (Arthur, 2006). In order to live up to his high moral standards, Anderson refused to certify accounts that had any questionable activity, even when pressured by some of his largest clients. Even though these practices were deemed too conservative by many competitors, the practices were effective for the company, and the company continued to grow over the years. Arthur Andersen passed away at the age of 61 in 1947, and he was credited to be “perhaps the best-known and respected American accountant” (Arthur, …show more content…

One of Andersen’s largest consulting contracts was with General Electric to develop and implement a new payroll system (Arthur, 2006). The consulting business continued to expand, and Andersen Consulting was created as a separate division in 1989. Both Arthur Andersen LLC and Andersen Consulting operated under the parent company of Andersen Worldwide. Although the two businesses were separate, tension only continued to rise to unprecedented levels as the consulting side of the business generated higher revenues with a much lower risk level. Without the help of the revenues from the consulting business, the profitability of Arthur Andersen LLP came into question, and many partners were terminated for not bringing in substantial revenues, only further escalating the tension. The strain compounded until Andresen Consulting completely split away in 2000 and become a separate entity under the name of Accenture, resulting in several complicated legal proceedings (Arthur,

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