1) The word "corrupt" refers to a person’s act(s) of being dishonest and engaging in practices such as lack of integrity, crookedness, and bribery ("Definition of CORRUPT", 2016). It also refers to the destruction of integrity thus causing an individual to be dishonest and disloyal. In the case of Arthur Anderson, the prosecution noted that the accounting firm dishonestly encouraged Enron employees to exercise routine destruction of documents knowing that the government’s investigations into the acts of the accounting firm were imminent. The deliberate intention of the destruction and hence wrongdoing of Anderson was meant to conceal the evidence of misappropriation of money by the company directors. Corruption is demonstrated in this case and the firm being culpable of willingly and dishonestly concealing fraudulent financial as well as the accounting activities in the company from the shareholders even where the business was not performing well. This made the company shareholders to lose their money due to Enron directors’ crooked ways. The system worked only to bribe the insiders so that they could not reveal the fraudulent activities in the company.
2) In the case of Anderson, the court found out that the Firm’s actions were improper but also established that the accountants did nothing wrong or any omission in their actions because of the vague interpretation of the word corrupt. Anderson was guilty of knowingly obstructing justice for Enron shareholders by shredding important financial records, company files, and deleting emails even though it claimed this was part of its housekeeping duties. Only a few employees were involved in the Scandal, but ultimately, Anderson and staff had acted unethically in their audit job at Enron. This is because the actions of Anderson were intended to influence the enforcement of rules, tax assessment and regulations. Anderson partners colluded with Enron managers to enrich the insiders and managers at the expense of the shareholders and the government who were interested part in the case (Toffler & Reingold, 2004).
5) The employees of Arthur Anderson accounting firm, though working in a company committed to hard work, quality and excellence acted unethically by failing to adhere to the values of integrity, honesty in their duties when handling its clients. The employees had ethical lapses when they strayed on the company mission and values by doing all that it could take provided they raised the profits to the expected levels set by the management. They perpetrated the act by providing misleading audit reports to clients who agreed to pay even when the reports were materially misleading and false. They, therefore, violated their public duty of ensuring that their customers engaged in financially ethical activities by acting professionally. In the Case of Enron, the employees failed to take care of identified conflicts of interest and ignored warnings against contracts proposed by Enron directors that were fraudulent (Johnson, 2016). By shredding documents that could be used as evidence in the case, the employees acted maliciously and dishonestly.
6) Anderson accounting firm maintained a policy that the company would retain relevant documents during the audit but destroy notes, memos, and drafts produced during the audit process. Nancy Temple sent an email advising the David Duncan on this policy. Acting on the policy, David Duncan complied with the retention policy hence paving the way for the destruction of the documents and emails that would be helpful in the case proceedings. My view is that Nancy Temple was the person that played a critical part in this case by authorizing shredding of documents and ultimately obstructing justice.
Importance of internal controls
Internal controls in organizations ensure that the financial reports issued are objective and free from any material errors. Internal controls prevent the occurrence and persistence of errors and mistakes in the internal operations to minimize the possibilities of financial errors. Control structures on the other hand are important in ensuring that financial reports are prepared using standard formats and procedures thus reducing any incidents of malpractices and manipulation. This reduces instances of financial fraud during the preparation and presentation of the financial statement by external and internal auditors.
References
Definition of CORRUPT. (2016). Merriam-webster.com. Retrieved 17 August 2016, from http://www.merriam-webster.com/dictionary/corrupt
Johnson, C. (2016). Arthur Andersen Case. Washingtonpost.com. Retrieved 17 August 2016, from http://www.washingtonpost.com/wp-dyn/content/discussion/2005/05/31/DI2005053101070.html
Toffler, B. L., & Reingold, J. (2004). Final Accounting: Ambition, Greed, and the fall of Arthur Andersen. Crown Business.
