Describe any potential conflicts of interest in the Enron and Arthur

Andersen cases.
With hundreds of workers, Enron, an American energy corporation, and Arthur
Anderson (AA), one of the top five audit and accounting firms globally, were
unquestionably extremely renowned businesses. Unfortunately, when the two
businesses joined forces to commit crimes, they went too far. Because Enron
paid AA $1 million each week in audit fees, Enron was one of AA's largest
clients. The amount of money was too much for AA to part with. To keep doing
business with Enron, they would have done anything. Even if they had to
support unethical behavior as an auditing business. On the other hand, Enron
was aware that they were concealing billions of dollars in debt from failed
projects and business partnerships using accounting flaws and subpar
financial reporting. These instances clearly involve a conflict of interest.

What actions may have been taken to prevent the conflicts of

interest you spotted?
AA was an established successful accounting company. Even if it meant losing
Enron as a customer, they needed just one moral leader to stand up against
the cover-up and guarantee that the right thing was done. They were just
carrying out their duties, after all. On the other hand, Enron had a lot on the
line; yet, business involves both gains and loses occasionally. Enron could have
been able to concentrate on their difficulties to guarantee that the wrongs were
righted until they were out of their troubles if they hadn't covered up their
losses.
What legal changes would you make to address the issues raised by
the Enron and Arthur Andersen case?
The Sarbanes-Oxley Act (SOX), which was passed, was a wise decision since it
toughened the penalties for people and companies that create, destroy, change,
and falsify data in investigations or participate in shareholder fraud. The
regulation also made sure that auditing companies were held to higher
standards of responsibility. Additionally, businesses are required to operate
impartially at all times and without regard to their clientele (Kenton, 2020). I
like Section 409 in particular because it forces management to inform the
public of important financial concerns right away rather than waiting for the
quarterly or yearly report. To discourage players in the sector, I think the
legislation is appropriately addressed and must be applied fairly and
consistently.
Examine other methods other than direct legal pressures that may
have persuaded Arthur Andersen and Enron to act morally.
When persuasion fails, force must be used, according to a proverb. I think the
situation would have been different if the SOX law had been passed sooner.
Because it would have been obvious that they were moving towards their own
demise with the new law, AA in particular may not have caved in to the
temptation. However, I also think that if a scandal of this size had occurred
previously, it would have served as a wakeup call for them. The Enron Corp.
bankruptcy may have been the largest corporate bankruptcy in history,
according to our text. This indicated that nothing comparable had ever
occurred before. During that time, Enron had a $63.4 billion market value
(Abhiruchi 2012)
How much (if at all) should accounting assessments take
sustainability concerns and challenges into account?
Sustainability refers to the management of the social and environmental
capitals required to generate long-term value, making it a very important issue
(SASB, 2016). Incorporating sustainability concerns requires determining the
use of financial data and demonstrates how reporting on the Triple Ps, or the
three principles of accounting, might increase openness and accountability.
Profit, the planet, and people.
When (if ever) should organizational choices that have major
financial consequences (savings or expenditures) for sustainability
be communicated to shareholders?
This is a sensitive matter, in my opinion, as Management may not always need
to consult shareholders before making a decision. Managers have a
responsibility to make sure the business is operated efficiently. However, it
would be sage to consult the shareholders if these choices were about
sustainability and also had significant financial ramifications. Sustainability
issues are positive at any time, but if the timing is poor, they might cause
issues or even push a business into bankruptcy.
References
Abhiruchi, S 2012. Managing malicious transactions in mobile database
systems.
https://mospace.umsystem.edu/xmlui/handle/10355/33224
Kenton, W, (2020). Sarbanes-Oxley (SOX) Act of 2002.
https://www.investopedia.com/terms/s/sarbanesoxleyact.asp
Sustainability Accounting Standards Board. (2016). SASB Exposure Draft.
Retrieved June
27, 2016. from Sustainability Accounting Standards Board.
http://www.sasb.org/