Arthur Andersen Collapse

Arthur Andersen Collapse

Introduction

Arthur Andersen was one of the biggest top 5 accounting firms around the country, practicing globally. The firm ran into many ethical issues when becoming involved in the Enron scandal, which affected the company globally. The ethical perceptions across cultures affected the employment of many people that ended up losing their jobs or transferring to other firms. There were many risks and consequences involved in the demise of Arthur Andersen. All of the risks involved affected the firm as a whole, around the world.

Ethical Issues

Ethical issues involving the demise of Arthur Andersen are solely based around the obstruction of justice involving the Enron case. "Its workers had destroyed ‘a significant but undetermined number' of documents related to Enron." (Kadlec, 2002) Destroying documents that were needed for future court proceedings involving Enron not only helped the collapse of Enron, but destroyed the Arthur Andersen firm in the process. Arthur Andersen was not only destroyed in the United States but globally as well. Employees quit and found new jobs, and clients "decided to quit the firm—not because the accountants are bad, but because the Andersen name is poison." (Ackman, 2002) Over 85,000 employees worldwide, most of which had nothing to do with the Enron scandal were without a job, all because the employees had received a memo to destroy documents that should not have been destroyed. Globally, the demise of Arthur Andersen destroyed the company name, and employees found other firms to work for.

Ethical issues involving the demise of Arthur Andersen globally revolved around the collapse of Enron. The firm's name was tarnished and had lost its right to perform as certified public accountants. Employees did not want to be associated with a firm that had been involved in such a scandal. Offices and divisions around the world closed their doors, and found new places of employment where they were able to build up their clientele once again, and start over.

Ethical Perceptions

Ethical perceptions across the world were about the same everywhere for the Arthur Andersen firm. Once the collapse of Enron occurred, and employees of Arthur Andersen destroyed all documents that were needed for the prosecution of Enron, employees globally left the firm in search of work in other firms. Employees in the United States that were part of destroying the documents did not act ethically on behalf of Arthur Andersen or Enron, which caused the loss of thousands of clients and employees worldwide. Employees globally did not feel that they could continue working for a firm with a name that was tarnished so badly. Many employees lost their jobs globally, which caused a major economic downturn around the world.

Risks and Consequences

There are many risks and consequences associated with the demise of Arthur Andersen. Risks involve why employees would want to put themselves at risk of obstruction of justice. Destroying evidence and files because a memo was sent out by a lawyer in the firm in no way justifies what