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Arthur Andersen (A): The Waste Management Crisis Case Solution & Answer

This Case is about ACCOUNTING

PUBLICATION DATE: October 10, 2011 PRODUCT #: KEL558-PDF-ENG

The instances characterize the death of Arthur Andersen, a company that had set the industry standard for professionalism in auditing and accounting. Once an instance of powerful corporate culture using a dedication to public service and independent ethics, Andersen saw its traditions and standards weaken as it shifted its style of government and grew. The (A) instance describes a disaster precipitated by the entrance of Waste Management, a leading Andersen customer, that it overstated its pretax earnings by $1.43 billion from 1992 to 1996. The resultant Securities and Exchange Commission (SEC) investigation finished with Andersen paying a $7 million fine, the biggest ever imposed against an accounting firm, and consenting to an injunction that effectively put the bookkeeping giant on probation. Students examine the causes of the issues of Andersen and guide Andersen leaders.  When Enron’s competitive utilization of off-balance sheet ventures became impossible to conceal in fall 2001, news reports said that Andersen auditors related communications with Enron and had participated in extensive shredding of draft files. Pupils are requested to act as disaster management consultants to Andersen CEO Joe Berardino. The (C) case particulars Andersen’s fall following its indictment and confidence on criminal charges of obstructing justice in the Enron case. Its conviction was later overturned by the U.S. Supreme Court on narrow technical grounds, but by then Andersen had ceased to exist, eighty-nine years after Arthur E. Andersen had taken over a small accounting firm in Chicago.  Pupils may concentrate on the effect of media on a reputational disaster.

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