Question

Enron accounting fraud, involving Arthur Andersen.

1. Describe the outcomes of the situation.

2. How did it affect the company?

3. How did it affect the employees?

4. How did it affect other stakeholders?

5. How did it affect society?

6. Did something good come out of the situation?

7. Can it be prevented? How?

8. Conclusions – Final recap of important points.

Answer 1

Answering the first 4 parts as per guidelines

1. Describe the outcomes of the situation.

• Investors lost close t0 60billion dollars and for most people, it meant losing their lives worth of savings.
• Arthur Andersen lost its accreditation
• The Sarbanes Oxley act was sharpened

2.How did it affect the company?

• 20000 employees lost their jobs
• The company filed for bankruptcy in 2001

3. How did it affect the employees?

• The pension fund of the company employees was destroyed overnight.
• Employees lost their jobs

4. How did it affect other stakeholders?

• People lost their faith in the American economic system
• The stock markets fell by a huge amount the highest during peaceful times
• Numerous banks came under scrutiny due to doubts of collusion