Running head: Management Planning Paper on Arthur Andersen Management Planning Paper on Arthur Andersen In 1913, the company Arthur Andersen started by Arthur Andersen and Clarence Delany by the name of Andersen, Delany, & Co. In 1918, it was given the name Arthur Andersen & Co. The company supplied tax, consulting services and auditing for the large business, and itself had a position in the “Big Five” accounting firms. In 2002, this firm was found guilty for auditing an energy corporation, Enron and it surrendered back its rights of auditing. This led to Enron’s bankruptcy and loss of 5,000 jobs.
Any type of business development requires constant planning. The expression planning refers to defining the goals of the business and shaping the potential plans of action. This sort of planning has to be approved by the firm and the stakeholders. The development of Arthur Andersen was also dedicated to structuring the character of the firm and there was an equal distribution of profits between the firm’s partners. In the long run, the disputes regarding profit sharing between its consultants and partners, led the division of firm into Arthur Andersen and Andersen Consulting.
Enron was the main client of Arthur Andersen for accounting, consulting and auditing but due to some problems in auditing, Arthur Andersen involved into a legal issue due to the case of Enron Corporation in 2001. It shared all the documents related with Enron’s auditing and the lawyers of Enron sued the firm for violating its legal responsibility. This resulted into the loss of firm’s reputation and the firm collapsed. The firm was violated in the case of Enron Corporation because of the initial retention policy of auditing papers.
In this manner, the company failed to follow its planning function of management. The planning for distributing equal shares of profit failed when the company gained more profit. The planning that was done to keep the records of the audited firm was unsuccessful in the case of Enron Corporation. Because the auditing was unsuccessful the lawyers at Enron Corporation sued Arthur Andersen and as a result the company subsided. Each company needs to maintain a balance between the ethical, legal, and corporate social responsibility standards.
All these standards refer to the integration of the morals of the business. However, in the case of Arthur Anderson, the company ailed in fulfilling the legal, ethical, and corporate social responsibility standards. All the issues related to these standards affected the management planning of the company. The legal responsibility failed when the company’s officials were not able to keep the documents of Enron, safe. It affected the company’s retaining potential as well as the policy of destroying the documents in a Judicial proceeding, which affected the management planning (Virginia & John, 2000). actors in the accounting process, which are the sources of income. The company failed to pay attention toward the customers, which affected the management rowth. It also refers to the distraction of managers and staff from the company’s goals and objectives as well as staining of trust and faith of the customers in the company’s business. The company Just focused on achieving profits from the market by overlooking the correct accounting practices. The responsibility of the corporate concentrates on the management of the organization dealing with society, stakeholders, and the environment.
The social responsibility of the company failed due to the lack of attention during the Enron audits that led to a negative impact on the customers. It tended toward the iscontinuation of many employees, which led to a decline of the trust of the employees in the organization. It affected the long-term planning of the company. The focus of the employees toward the achievement of the goals and objectives was demolished. It refers to the destruction of corporate social responsibility of the business (Virginia & John, 2000).
The organization has to consider the stakeholders, customers, community, and employees while performing its operations. Proper implementation of as well as the utilization of all the legal standards, ethical standards and social responsibility tandards, assist an organization in achieving growth and success in the business environment. In the case of Arthur Anderson, the company has to focus on the development of strategic planning and implementation for effectively performing its operations.
The three important factors influencing the company’s planning are the lawful ethical and the corporate social responsibility factors. These three factors are an essential part of any organization and the organization must comply properly to all these factors, as they are necessary for planning in an organization (Galbreath, 2006). The company’s strategic planning is often influence by legal and ethical factors. The legal factor of Arthur Anderson is not functioning properly and has an adverse effect on the planning of the organization.
It follows wrong and illegal accounting practices, which has led the company into legal troubles. The company took away from their biggest and most popular client- Enron Corporation. The company should work in accordance with the legal laws and should properly fulfill its legal responsibilities. The ethical factor of Arthur Anderson clearly states that it should fulfill its ethical esponsibilities, regardless if it loses any profitable business or customers. Its moral values also show honesty in its responsibilities that include dependability and honesty.
However, the company made faulty presentations to attract earnings from the public. The company violated every ethical rule regulating the conduct of licensed public accounts. The factor of corporate social responsibility clearly states that an organization should fulfill its responsibility toward the society through its actions and activities. In case of this factor also, Arthur Anderson does not comply with the statutory bligations and has adversely affected the community, employees, shareholders, and the customers.
All the three factors of the company have a negative impact on its responsibility laws. Each company must abide by the rules and obligations and should carry out its legal, ethical, and company social responsibilities. The company must do what they are supposed to do to achieve profit and success. A company should never break the trust and confidence of its clients, as Arthur Anderson did with Enron Corporation (Galbreath, 2006). Arthur Anderson had terrible planning and management function.
The company could not manage its responsibilities and did not take care of their business social responsibility. The company violated the ethical and legal rules and procedures and went against their largest client, Enron Corporation. The ethical, legal and company social responsibility impacted the organization planning system. The company’s strategic, operational, and planning is also affected by the factors state above. Arthur Anderson has taken away from his clients and customers and was able to take advantage of the accounting system.
The company was not able to provide a elationship that could be honored with their customers; they provide inconsistent information and violate the legal and ethical laws of the company. Whenever a company is in operational standards, they should always comply with the rules and regulations when doing business with their clients and customers. Reference Galbreath, J. (2006). Corporate Social Responsibility Strategy: Strategic Options, Global Considerations. Corporate Governance. Virginia, M. M. ; John, C. (2000). Arthur Andersen: Challenging the Status Quo. The Journal of Business Leadership. American National Business Hall of Fame.