scroll to top
Stuck on your essay?
Get ideas from this essay and see how your work stacks up
Word Count: 696
The auditing profession is a key reason that the United States enjoys the most well-developed capital markets in the world Auditors provide shareholders lenders employees customers suppliers and policy-makers with assurance that the financial information provided by companies is reliable During the past months the auditing profession has received unprecedented attention Andersens audit of Enron is front-page news a place where auditors seldom find themselves As part of the fallout from the Enron-Andersen story many are suggesting sweeping changes to the structure of the entire auditing profession notably the requirement that audit firms divest their business and tax advisory services Whether sweeping changes are necessary is subject to debate What is not subject to debate is that Enron went bankrupt because its business failed The auditors did not cause the failure If Enrons financial statements which Andersen audited misled investors then Andersen should and will suffer financial loss This is a risk that auditors understand Our research suggests that Andersen might not have fully appreciated another risk associated with the Enron audit Even if Andersen is fully exonerated it likely will suffer substantially simply because it was the auditor of a major company that went bankrupt This guilt by association is what auditors call business risk When a company fails auditors face both financial and reputational loss even if they conducted an audit correctly Financial damages arise because auditors provide one of the few remaining sources of cash so-called deep pockets Reputational damages can be even greater than the financial costs associated with a bankruptcy because that association erodes an auditors brand We have a longstanding interest in how auditors handle this risk of association As part of a research project we interviewed the CEO or the head of the auditing practice for each of the Big Five firms One firm not Andersen provided us with detailed confidential information about their fees for 422 audits
@Kibin is a lifesaver for my essay right now!!
- Sandra Slivka, student @ UC Berkeley
Wow, this is the best essay help I've ever received!
- Camvu Pham, student @ U of M
If I'd known about @Kibin in college, I would have gotten much more sleep
- Jen Soust, alumni @ UCLA