Organizational Biases in Ethical Decision Making

Posted: August 26th, 2021

Organizational Biases in Ethical Decision Making

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Institutional Affiliation

Organizational Biases in Ethical Decision Making

Causes of Arthur Anderson’s Downfall

            Arthur Anderson’s downfall was instigated by the company’s abuse of accounting ethics. In 2001, Enron was found guilty of reporting $100 billion in revenue through systematic accounting fraud (Peavler, 2016). As the concerned auditing firm, Arthur Anderson was found to be complicit in this fraudulent act, and thus, it came under intensified scrutiny by American authorities. One among these authorities was the Powers Committee, which conducted thorough investigations into the company’s role in the Enron scandal. It dug up evidence that suggested that Anderson failed to fulfill its professional accounting responsibilities as regards its audits of Enron’s financial statements. In addition, the company failed in its expected role of bringing to the attention of Enron’s board of directors the disturbing concerns about the flouting of internal contracts (Goldberg & Centers, 2012). It is upon these revelations that Anderson was convicted in 2002 for having obstructed justice through its shredding of documents that were related to its audit of Enron. Ultimately, the impact of this scandal coupled with associated criminal complacency findings destroyed Arthur Anderson. For purposes of highlighting the severity of the risk that ethical malpractices pose on both the short term and long-term survival of accounting firms, I agree with the author’s position.

What is emphasized at the Company in Which I Work?

            At the company in which I work, no particular emphasis is placed on the “off the shelf” ethics policy. Instead, the management team emphasizes the importance of establishing and maintaining strong client relationships. In going about our business, we are usually guided by the belief that a satisfied client is a profitable business. Through this strong client relationship, our company has managed to retain all of its initial clients and attract newer ones. Overall, from the client feedback that we regularly receive, our company has managed to stand out as a provider of quality customer service.

The Most Powerful Motivating Factor for me in the Future

            In my future business endeavors, the most powerful motivating factor that I intend to use is the attainment of impeccable customer satisfaction. If the professional experience that I have gathered so far is significant, I understand that a satisfied client will always return to buy goods and services from the company selling them. Putting clients first also helps in designing and implementing business decisions that are aligned with the market needs, and thus, forestalling the possibility of the business incurring losses. I have already made a public commitment to the honing of this valuable skill as I look forward to joining the competitive business landscape someday. By making this public commitment, I believe I will be bound to stay keen on the activities that can make this dream a possibility soon.

What Would Bring the “Should” to the Forefront in Future Decision Making

            The wise say that necessity is the mother of invention (Duska, Duska & Kury, 2018). In future decision-making points, I will be guided by the absolute importance of one service or product over the other in determining if it should move to the forefront of my priority list. Also, I will base my decision on the ethical concerns to be addressed in adopting one service or product over the other.

Recommendations for Improvement of the Audit Industry

            First, audit companies should gain a better understanding of the behavioral factors that encourage bias. Secondly, the regulators of audit firms should come up with and implement policies that strengthen the audit firm’s independence and value addition. 

References

Goldberg, S. R., & Centers, D. P. (2012). Why most audit ethics courses don’t work. Journal of Corporate Accounting & Finance, 23(4), 23-29.

Duska, R. F., Duska, B. S., & Kury, K. W. (2018). Accounting ethics. John Wiley & Sons.

Peavler, R. (2016). Sarbanes-Oxley Act and the Enron Scandal-Why Are They Important. Retrieved Apr1, 2017.