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The paper may provide policy makers with another tool for analyzing the impact of disciplinary actions against public accounting firms. It analyzes the termination of US…
The paper may provide policy makers with another tool for analyzing the impact of disciplinary actions against public accounting firms. It analyzes the termination of US public accounting firm Arthur Andersen using arguments developed in the capital punishment debate and develops a paradigm for examining future actions against public accounting firms. The authors reviewed major arguments for and against capital punishment and assessed their usefulness as a tool in examining the Andersen case. A paradigm was then developed to assess the propriety of the action against Andersen and possible future cases. Most arguments regarding capital punishment were applicable to the Andersen case, allowing the authors to develop a template for assessing future disciplinary actions against public accounting firms. The “death penalty”, as applied to Arthur Andersen, was justified. While corporations are “legal persons”, they are obviously not human. This weakens (or renders moot) some of the most powerful arguments against capital punishment. Furthermore, this paradigm may be less useful in societies that prohibit capital punishment. Provides a unique way of examining the impact of disciplinary action against public accounting firms.
The cases describe the demise of Arthur Andersen, a firm that had long set the industry standard for professionalism in accounting and auditing. Once an example of strong…
The cases describe the demise of Arthur Andersen, a firm that had long set the industry standard for professionalism in accounting and auditing. Once an example of strong corporate culture with a commitment to public service and independent integrity, Andersen saw its culture and standards weaken as it grew explosively and changed its mode of governance. The (A) case describes a crisis precipitated by the admission of Waste Management, a major Andersen client, that it overstated its pretax earnings by $1.43 billion from 1992 to 1996. The resulting Securities and Exchange Commission (SEC) investigation ended with Andersen paying a $7 million fine, the largest ever levied against an accounting firm, and agreeing to an injunction that effectively placed the accounting giant on probation. Students analyze the causes of Andersen's problems and advise Andersen leadership. The (B) case covers Arthur Andersen's relationship with Enron, one of the great success stories of the “new economy” boom. When Enron's aggressive use of off-balance sheet partnerships became impossible to hide in autumn 2001, news reports stated that Andersen auditors had engaged in extensive shredding of draft documents and associated communications with Enron. Students are asked to act as crisis management consultants to Andersen CEO Joe Berardino. The (C) case details Andersen's collapse following its indictment and conviction on criminal charges of obstructing justice in the Enron case. Its conviction was later overturned by the U.S. Supreme Court on narrow technical grounds, but by then Andersen had ceased to exist, eighty-nine years after Arthur E. Andersen had taken over a small accounting firm in Chicago. Students can focus on the impact of media on a reputational crisis.
Students will: Identify the teachable moment in a crisis that leaders can leverage as an opportunity to improve a firm's reputation or core identity, to reinforce values, and to drive change, Understand the impact on crisis management of the media landscape and regulatory decision-making, Realize the fragility of corporate cultures and the need to actively maintain them, especially during difficult times,
This chapter examines ethical leaders in accounting. We analyze the actions of individuals broadly associated with the accounting profession who have been presented with…
This chapter examines ethical leaders in accounting. We analyze the actions of individuals broadly associated with the accounting profession who have been presented with challenging situations and evaluate their responses to difficult circumstances. Our subjects are transformational leaders who have demonstrated a commitment to the public interest along with the moral motivation and character to persevere under challenging circumstances. By providing examples of leaders who have had a positive impact on the public accounting profession, both students and practicing accountants will learn how ethical leadership can make the profession stronger.
The knowledge management assessment tool (KMAT) is designed to help organisations make an initial high‐level assessment of how well they manage knowledge. Completing the KMAT can direct organisations toward areas that require more attention, as well as identify knowledge management practices in which they excel. The KMAT proposes ways that four enablers (leadership, culture, technology and measurement) can be used to foster the development of organisational knowledge through the knowledge management process. This process embraces the steps that the organisation takes to identify the information it needs and the manner in which it collects, adapts and transfers that information across the organisation. The model places all the major knowledge management activities and enablers together in a dynamic system. Describes how organisations can have their performance rated and benchmarked with those of other organisations for each of 24 practices.
This article analyzes Accenture’s reincarnation by pinpointing the main lessons that might be emulated by other companies contemplating going down the three‐pronged road…
This article analyzes Accenture’s reincarnation by pinpointing the main lessons that might be emulated by other companies contemplating going down the three‐pronged road to rebranding, restructuring and repositioning. Its objectives are three‐fold. First, it traces the company’s heritage and highlights that it pioneered the splitting of consulting from accounting activities. Second, it discusses the three pillars of Accenture’s transformation involving rebranding, restructuring and repositioning campaigns. Finally, it recognizes Accenture’s two leaders who transformed this company from merely good to truly great in a relatively short time.
This chapter examines the integration of leadership topics into an accounting ethics course. Literature review, course review, student feedback. Both practitioners and…
This chapter examines the integration of leadership topics into an accounting ethics course. Literature review, course review, student feedback. Both practitioners and educators have called for broader education of accounting students in general, and student learning of leadership and interpersonal skills in particular, to prepare students who are entering the profession. I have used the leadership topics and activities discussed in this chapter in a stand-alone ethics course in a graduate business program, but they could also be integrated into an undergraduate course. I provide details regarding course content and delivery, including a weekly schedule of accounting ethics and leadership readings, short cases, and leadership/ethics case research topics. Many of the leadership and ethics subjects in the course are expected to be addressed in the accounting workplace – exploring these topics helps better prepare students to confront future challenges. Although both practitioners and educators have called for broader education of accounting students in general, and student learning of leadership and interpersonal skills in particular, little progress has been made in this area. This chapter contributes to this area by highlighting the value of integrating leadership topics into an accounting ethics course.
While scholars discuss the theory of “Business Ethics,” students grapple with applying those theories to hypothetical case studies and business people struggle to live…
While scholars discuss the theory of “Business Ethics,” students grapple with applying those theories to hypothetical case studies and business people struggle to live business ethics in practice. Many fail, casting large and ominous shadows. We are inundated with their stories. We need to hear more often stories of those who have succeeded and why their examples are important to the field of Business Ethics.
This chapter, after providing a brief overview of the differing uses of the term, Business Ethics, expands upon the metaphor of “ethical space” as the eye of a moral hurricane, provides diagrams illustrating the formation of ethical space in a business behavioral context, applies those diagrams to the examples of Andersen and Feuerstein as moral exemplars, discusses ways to mitigate the shadows that eclipsed their example, and suggests ways to enlarge corporate ethical space.
Ethics is a habit learned through mentoring and developed through practice. In a world of conflicting influences, we each carve out our own ethical space that can serve as an example to others as they face their own individual ethical challenges, but at the corporate level, a moral exemplar will inform the larger corporate ethical space only when the leadership of the corporation consciously adopts and constantly reinforces the example of its moral exemplar.
This chapter uses the visual metaphor of the eye of a hurricane to discuss the formation and importance of ethical space to moral exemplars in a world of conflicting influences and moral pressures.
This paper responds to concerns raised by the Securities and Exchange Commission (SEC), Public Company Accounting Oversight Board (PCAOB) and scholars over the rapid…
This paper responds to concerns raised by the Securities and Exchange Commission (SEC), Public Company Accounting Oversight Board (PCAOB) and scholars over the rapid growth of Big 4 consulting practices. This paper aims to explores the question: Does the regrowth of sizable consulting practices by the Big 4 influence audit reporting lag and restatement rates?
A population of the SEC-registered US audit clients of the Big 4 was used in this study. Longitudinal data on Big 4 audit clients from 2000 through 2009 were analyzed to determine the impact of consulting practice size on the clients’ audit reporting lag and restatement rate.
This paper finds that consulting practice size has a positive and statistically significant influence on audit reporting lag and restatement rate. The results are robust to alternative specifications of the sample and controlling for the level of non-audit services provided to audit clients.
The findings contribute to the discussion of the scope-of-services issue. They provide empirical support for Zeff’s (2003) and Wyatt’s (2004) intuition that the loss of Big 4 professional focus – not simply conflicts of interests – is a major factor affecting the audit quality.
The uniqueness of this paper is in how it counts restatements. Each year this paper counts that annual financial statements are restated as opposed to each disclosure of a restatement. This paper’s contribution is to examine the association between the regrowth of Big 4 accounting firm consulting practices with audit reporting lag and restatements.
Establishing an audit committee presumably strengthens the external auditor’s independence. Several studies have examined how audit committees affect the selection of the…
Establishing an audit committee presumably strengthens the external auditor’s independence. Several studies have examined how audit committees affect the selection of the company’s external auditor, negotiate audit fees and enhance the auditor’s independence. But what of the independence of the audit committee members themselves? Do audit committee members exhibit biases when they select their company’s auditors? The relationship between the entity’s external auditor and the audit committee member’s affiliated company’s auditors has not been examined. For example, are audit committee members prone to select or remain with audit firms with which they have developed a formal relationship within their own company? This study of 247 New York Stock Exchange firms finds significant relationships (at the 0.05 level of significance) between CPA firms selected by audit committees and by the CPA firm which audits the audit committee member’s own organization. Results indicate that audit committee members exhibit conscious or unconscious biases in their selection or retention of their companies’ auditors.