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Evaluate Andersen's claim

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Evaluate Andersen's claim that their problems on the Enron audit were due to a few "bad partners" in the organization. If you disagree with this claim, discuss what you think were the root causes of the problem.;Context for responding: Your role is as a young lawyer at a legal firm in charge of defending AA against the District Attorney (DA) on the charge of obstruction of justice due to the fact that your client is accused of shredding incriminating documents related to the Enron audit. Your client, Arthur Andersen, does not dispute that the Houston office shredded documents or signed off on suspect accounting at Enron, etc. However, AA's defence is that there were a few "bad apples" (bad employees) in its Houston office and that this is where the case starts and ends. AA has already fired the culprit, the Houston audit partner David Duncan who was in charge of the Enron account.;You know that the Houston DA?s office is preparing a comprehensive indictment against, not just the Houston office of AA, but the entire firm. In other words, the Houston DA is trying to put your client AA out of business. You also know that the DA?s office is going to build its case to explain AA?s behaviour on the foundation of an organisational economics model called the ?3-legged stool model?. They will concentrate on;1. Allocation of decision rights with respect to audit quality at AA;2. The performance evaluation system used to reward AA auditors;3. The incentive compensation system used to reward AA auditors.;Your response should explain to the presiding judge how each of these 3 variables were designed by AA to strengthen, not weaken, the quality of service they provided their clients and to differentiate AA from the other ?big five? auditing firms (the other major accounting firms are: PricewaterhouseCoopers, KPMG, Deloitte, Ernst and Young).;The other important information was presented in the question (and the attached case, of course). To reiterate;We need to explain to the presiding judge how each of the 3 variables listed below were designed by AA to strengthen, not weaken, the quality of service they provided their clients and to differentiate AA from the other ?big five? auditing firms (the other major accounting firms are: PricewaterhouseCoopers, KPMG, Deloitte, Ernst and Young).;These 3 variables are;1. Allocation of decision rights with respect to audit quality at AA;2. The performance evaluation system used to reward AA auditors;3. The incentive compensation system used to reward AA auditors.;In terms of context, we are a young lawyer at the legal firm in charge of defending AA against the Houston US District Attorney (DA) on the charge of obstruction of justice due to the fact that your client is accused of shredding incriminating documents related to the Enron audit.;Your client, Arthur Andersen, does not dispute that the Houston office shredded documents or signed off on suspect accounting at Enron, etc. However, AA's defence is that there were a few "bad apples"(bad employees) in its Houston office and that this is where the case starts and ends. AA has already fired the culprit, the Houston audit partner David Duncan who was in charge of the Enron account.;You know that the Houston DA?s office is preparing a comprehensive indictment against, not just the Houston office of AA, but the entire firm. In other words, the Houston DA is trying to put your client AA out of business. You also know that the DA?s office is going to build its case to explain AA?s behaviour on the foundation of an organisational economics model called the ?3-legged stool model?, which speaks to the 3 variables listed above (allocation of decision rights, performance evaluation system, and incentive evaluation system).;Thank you so much for your time! Good luck.

 

Paper#15373 | Written in 18-Jul-2015

Price : $57
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