The History Of Accounting For Enron Accounting Essay

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Donald Duncan had responsibilities to Arthur Anderson, Enron's management, stakeholders, as well as the accounting firm however he failed in the areas of due attentiveness, guilty of negligently, and demonstrate a complete lack of ethics for the duration of his involvement with Enron. As the head auditor, Duncan's responsibilities were to maintain the highest professional accounting and auditing ethics, and to lead the auditing team in a responsible, unbiased manner. Due to several factors taking place at Enron, most of which surrounded Duncan and his firm collecting in excess of $100 million per year in Enron consulting fees (Beauchamp, Bowie, & Arnold, 2009). (p. 411)

All auditors, are requires in maintaining an unbiased attitude knowing that fraud and misstatements could be present, but not judging without the supporting evidence that would arise within audits, that in this case was never provided by Duncan. Therefore, Duncan was responsible for providing professional service that he was capable of, to his employer, Arthur Andersen, as well as to the responsibility to Enron's management, in that auditors don't audit companies for the benefit of the company, as they should provide audit companies for the benefit of the shareholders.

Duncan had a duty to shareholders to produce a clean audit that would showed the stockholders were losing money however, when Enron collapsed it become a huge to impact upon the market as well as among the economy. As a professional Duncan had action as he should have instead his actions, including the ordering of Enron documents to be shredded, become a disgrace to the accounting profession and to business ethics (Beauchamp, Bowie, & Arnold, 2009). (p. 412)

What are the ethical responsibilities of a corporate attorney, such as Nancy Temple, who works for "aggressive" client wishing to push the envelope of legality?

There is nothing essentially wrong with aggressive approach; including aggressive accounting, practices providing the effect remain legal. The problem within this case is that the accounting and legal practices were not legal therefore as an attorney Nancy Temple knew what documents will and will not produce the most reliable forms of evidence in that she ordered Duncan to start shredding Enron's audit documents (Beauchamp, Bowie, & Arnold, 2009). (p. 413) The only position that she ordered the Andersen staff to stop shredding documents was when the SEC gave official notice to Andersen stating that they were seizing Enron documents even through SEC investigation was foreseen, however Temple still ordered the shredding of potential evidence (Beauchamp, Bowie, & Arnold, 2009). (p. 412)

As a corporate attorney of a public company, Nancy Temple acted in sole interest of her client even when investors become involved corporate attorneys shouldn't act solely in their client's best interest. Professional legal ethics would dictate that they also act in the interest of the investors. Nancy Temple was unsuccessful in her duties as a responsible and ethical attorney.

Under what conditions should an employee such as Sherron Watkins blow the whistle to outside authorities? To whom did she owe loyalty?

Sherron Watkins owed loyalty to herself and the investors in that is exactly why she blew the whistle at Enron. Her email messages is apparent that she demonstrated concerned as to what would materialize with investors as she knew that the SPEs were going to be discovered due to how they were structured, and she knew that two of the SPEs were at the end of their lives and had to be discovered (Beauchamp, Bowie, & Arnold, 2009). (p. 410) Watkins indicated in her emails that it would be determined that the company had been hiding their losses in the SPEs indicating her duty to the investors of such a large company.

Although it is apparent that employees owe loyalty to their employers however, fraud or wrongdoing are present, they owe their loyalty to protecting the investors and the public as in Sherron Watkins situation being a whistle blower.

To whom does the board of director owe their primary responsibility? Can you think of any law or regulations that would help ensure that boards meet their primary responsibilities?

The board owes their primary responsibilities to the investors when we are dealing with a public company. The board of directors should have been regulated to begin with however, there was no actual law prohibiting the structure of the board to include the former CEO unfortunately at the time there was a lack of regulations and laws for Enron.

Over the years tighter regulations that were actually developed due to Enron scandal resulted in the implementation of the Public Company Accounting Oversight Board (PCAOB), the Sarbanes-Oxley Act (SOX), and tighter regulation and monitoring imposed by the SEC. Additionally, Enron's board of directors wouldn't have followed any laws and regulations as they were aware their creation become biased knowing the frauds that took place at Enron in that there were no regulations would have had no impact upon the board.

What responsibilities do government regulators owe business? To the market? To the general Public?

Government regulators owe their responsibilities to the investors, just as the board of directors should in any business. Companies need their investors, particularly a company the size of Enron in that investors for capital are much a necessity to operate. The regulators, auditors, and the board of directors primary responsibility is the obligation and well fair to the investors. Since the investors aren't inside running the company they don't have the capability to view the actually of the dishonestly that transpiring within the company. However if regulation were implemented investors could relay on the regulators, laws, and management ensuring the company is effectively in the best interest of the investors.

The responsibility that government regulators such as the implementation SOX creation and the toll on the market when Enron crash to protect the market and stakeholders. Therefore, had there been greater regulation and governmental control in place before this instance occurred it could have alleviated a lot of the destruction and damages that resulted from Enron.

The government regulators is to protect the public resulting in no reason at all why companies this size shouldn't be monitored in their accounting practices such as what took place inside of Enron were blatant, and they were paying their auditing firm in excess of $100 million per year in non-audit related fees, which were consulting fees (p.353) . In other words there is no excuse for a complete lack of governmental control over the practices that were taking place at Enron even through there are regulations in place now in protecting investors and the public however those regulations came too late in the case of Enron.

6. Are accounting and law professions or businesses? What is the difference?

Accounting and law are professions whereas Enron and Arthur Andersen are businesses. In a profession, we see certain elements that are required such as professions generally require a professional license such as a CPA license, a license to practice law or medicine, or any profession that requires certifications and ongoing training and development to maintain a continuing education that requires maintaining the individual's certification or license.

However, a business runs as its own entity for the sole purpose of a business in that generates revenue in order to provide a return on investment for shareholders.