Question

How might the sequential lists of frauds perpetuated by Authur Andersen clients (Waste Management, Sunbeam, and Enron) have affected the decision by the SEC and federal prosecutors to aggressively seek Authur Andersen’s legal demise?

Answer 1

In the words of Daniel Edelman & Ashley Nicholson " Integrity is the hallmark of the accounting profession and stakeholder's rely on their work product"

Hence, integrity is of paramount importance for auditors as the dependency laid on their work is far more from stakeholder's perspective. Once the integrity of an audit firm is questioned, it automatically signifies that there are more things the public needs to discover. Hence in line with and reson for this Government came up with a new regulation namely THE SARBANES - OXLEY Act wherein the violators of the provision laid down in this Act shall have a corresponding consequences for altering, manipulating or formulating financial records to defraud the users of a company's financial statement and related information. So CEO's and CFO's of various companies must Act with integrity and set the examples so that others could follow.