The ;crisis of confidence” on the public accounting profession was not something that happened overnight and it is not the fault of one group of people or individuals. The accounting profession is partly to blame for this crisis, as the necessary rules, regulations and guidelines were not in place to hold companies and accounting firms responsible for their actions. The lack of regulations also allowed companies to partake In misleading transactions. These transactions were perfectly legal at the mime, just not necessarily ethical.
Companies did not have to be 100% honest when sharing earning results and company structure with shareholders. Arthur Anderson & Co. Was also to blame as they were the accountants for Enron. They were the ones with the expertise who should have known better and looked to fully explain and disclose what they knew. Andersen’s commitment Is to the shareholders, not to their client and they needed to act In a way and present the statements fairly so that a user could make an Informed decision and that the statements presented fairly.
Enron Is also to blame. They were focused on profits – which Is not necessarily a bad thing, except for the fact that they were not forthright in how they were getting there. 5. I believe there has been a shift in regards to the concept of professionalism in relation to public accounting. After the Enron crisis, people began to second guess accountants and their work. There was fear that many other scandals and crises would occur. Because of this, the accounting profession had to be much more cautious and proactive in their approach.
They have to err much more on the side of caution and pay close attention to ensure they are always acting ethically, responsibly and in the financial statement users’ best interest. This is where SOX and other acts of Congress come into play. It is not to punish the auditors, but to help them and other accountants keep their reputation and ensure that firms are acting appropriately. It limits the engagement between and auditor and client and helps to ensure all understand the laws and expectations that are relevant to each arty.
People are paying attention to auditing and audit firms now more than ever, the auditors and accountants know this and must be more diligent and professional than ever so that another scandal like Enron does not occur. 6. I believe quarterly financial statements should be audited as a company could be deceiving shareholders for a full year prior to an auditor uncovering something. In the case of public companies, auditors are probably do some type of audit work year round so that would be rare, but is possible.
Currently auditors do not have any responsibility regarding quarter end financial statements as they are unedited and an auditor Is always only responsible for the fairness of audited statements not the statements themselves. I do not believe users of statements can make the best decision based on unedited figures. 1. The “crisis of confidence” on the public accounting profession was not something partake in misleading transactions. These transactions were perfectly legal at the time, Just not necessarily ethical.
Companies did not have to be 100% honest when disclose what they knew. Andersen’s commitment is to the shareholders, not to their client and they needed to act in a way and present the statements fairly so that a user could make an informed decision and that the statements presented fairly. Enron is also to blame. They were focused on profits – which is not necessarily a bad regarding quarter end financial statements as they are unedited and an auditor is themselves. I do not believe users of statements can make the best decision based
