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Enron vs. Andersen: Ethical Issues and Conflicts of Interests. Essay

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Updated: Sep 27th, 2021

The basic organizational pressures within Andersen that increased the potential pressure to engage in ethically questionable practices came right from the fact they were involved personally with the Enron top brass. Being an audit company of high reputation it was evident and expect that the members of Andersen would always maintain their neutral position on the issue of profession and ethics. However, Andersen went in the relationship with Enron for reasons. It is stated, “Enron could be a volatile partner, at times even a bully. But Andersen was hooked on a relationship that it found simply too lucrative to abandon.” (McRoberts, 13).

In a way, this pressure was greed, financially and socially, and ethically questionable practices by Andersen that followed were result of this step. From the point of view of heuristics and different types of biases, this case can be enumerated as unintentional unethical practice because the members of Andersen never knew consciously that Enron is corrupting them.

In this context, it would be relevant to mention the realization by Loewenstein who proved that people believe that the end goal justifies every aspect. (Bazerman, 1) Thus, from the point of view of Andersen, the Enron motivated the employees and it was found that “Many of Andersen and Enron’s top number crunchers took annual golf vacations together, making friendly bets on each round. They went on ski outings, schussing down the slopes together”. (McRoberts, 13) As a result, “They were out of control, and they didn’t even know it because it was so cool to associate yourself with the top, with the guys who run a multibillion-dollar company.” (McRoberts, 13) It is easy to recognize that Enron slowly corrupted the Andersen members ethically by becoming personal with them.

All these factors promote the company’s commitment to Enron and its accounting practices. Andersen was the auditor of Enron and by becoming up, close and person with the auditor it was easy for Enron to motivate Andersen. McRoberts reports, “The closeness between Andersen and Enron–the firm’s $58 million client in fiscal 2000 alone–largely robbed the auditor of its good judgment, key employees inside both firms contend.” (McRoberts, 13).

It should be noted that had Andersen done differently to prevent the Enron debacle it would have been good for both firms in the context of ethical and moral values and the heuristics and different types of biases could have been easily avoided. Andersen could have easily issued a circulation within the office prohibiting its officers and personnel from mixing too much with Enron officials and urging them to keep a thorough and distinctive professional relationship. Anderson could have encouraged the members to provide quality time to their respective family members thereby avoiding close interactions with Enron outside office hours. However, one element could have solved the problem of personal proximity with Enron. Andersen should have discouraged the employees from using office computers as a mode of entertainment (like playing fantasy football with Enron officials) and should have been very rigid on such subjects. This act of entertainment actually developed personal relations and attachments between the employees of the two companies that ultimately led to the fiasco of the both.

Works Cited

Bazerman, Max; Why good accountants do bad audits?

McRoberts, Flynn; A FINAL ACCOUNTING: The fall of Andersen; Chicago Tribune; 2002

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IvyPanda. (2021, September 27). Enron vs. Andersen: Ethical Issues and Conflicts of Interests. https://ivypanda.com/essays/enron-vs-andersen-ethical-issues-and-conflicts-of-interests/

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"Enron vs. Andersen: Ethical Issues and Conflicts of Interests." IvyPanda, 27 Sept. 2021, ivypanda.com/essays/enron-vs-andersen-ethical-issues-and-conflicts-of-interests/.

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IvyPanda. "Enron vs. Andersen: Ethical Issues and Conflicts of Interests." September 27, 2021. https://ivypanda.com/essays/enron-vs-andersen-ethical-issues-and-conflicts-of-interests/.

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IvyPanda. 2021. "Enron vs. Andersen: Ethical Issues and Conflicts of Interests." September 27, 2021. https://ivypanda.com/essays/enron-vs-andersen-ethical-issues-and-conflicts-of-interests/.

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IvyPanda. (2021) 'Enron vs. Andersen: Ethical Issues and Conflicts of Interests'. 27 September.

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