What was the prime motivation behind the decisions of Arthur Anderson's audit partners on the Enron, WorldCom, Waste Management, and Sunbeam audits: the public interest or something else? Cite examples that reveals this motivation. I have read my text but it really does tell why.
To understand the prime motivation behind the decisions of Arthur Anderson's audit partners on the Enron, WorldCom, Waste Management, and Sunbeam audits, we need to analyze the available information and consider some commonly cited factors. Please note that the following explanation is based on historical analysis and may not capture the complete perspective.
The motivation behind Arthur Anderson's audit partners' decisions in these cases is complex and can be attributed to a mix of factors, including financial incentives, preservation of client relationships, and potential conflicts of interest. The specific motives may vary for each audit, but there are some common themes.
1. Financial Incentives: One significant factor is the financial incentives associated with auditing large corporations. The more clients an audit firm has, the more revenue they generate. In the case of Arthur Anderson, maintaining relationships with clients like Enron, WorldCom, Waste Management, and Sunbeam was financially lucrative. This financial incentive can create pressure on auditors to prioritize client satisfaction over public interest.
2. Client Relationships: Building and sustaining positive relationships with clients is crucial for any audit firm. In these specific cases, Arthur Anderson had longstanding relationships with Enron, WorldCom, Waste Management, and Sunbeam, which may have influenced the audit partners' decision-making. The fear of losing these high-profile clients could have pushed auditors to be less critical and lenient in their assessments.
3. Potential Conflicts of Interest: Audit firms may face conflicts of interest when they provide both auditing and consulting services to the same client. In the Enron case, for example, Arthur Anderson was also providing consulting services, leading to potential conflicts in balancing their duty to provide independent audits and maintain a profitable consulting relationship.
4. Lack of Independence: The audit partners' motivation might also be influenced by the desire to maintain a close relationship with their clients. This closeness could compromise their independence and objectivity, leading to biased decision-making in favor of the clients.
It is essential to note that the motivations discussed here are based on general observations and conclusions drawn from these cases. The actual motivations of the audit partners involved could be more complex and varied. To gain a more comprehensive understanding, it would be helpful to refer to specific case studies, scholarly articles, or reports examining these events in detail.