What is Andersen's effect?

The

effect of Andersen refers to the increased control of financial records that appeared after the big financial scandal in 2001, which concerned the accounting company Arthur Andersen. Companies feared the result of the scandal and the problems it revealed in audit and accounting practices, increased the intensity of their audit programs to avoid meeting similar problems. The scandal indirectly contributed to improving the standards and procedures of business accounting. ENRON PO Audit The accounting company published a positive financial statement that this information was accurate and correct. When Enron applied for bankruptcy, the event was unexpected because the company should not fail. Other mud on waters, members of the company destroyed and hid the evidence and exposed themselves to criminal accusations in the context of the role of the role in the case. The Andersen effect included more intense evaluation of audit procedures, staff involved in financial records and records themselves. Companies also wanted mistakes what nejdra, regardless of their origin to correct the statement. Andersen Effect could serve the members of the Council that decides on the company, as well as shareholders who needed accurate financial information to lead their investment procedures.

Enron has been accused of using "creative accounting" to hide losses and create a more pink picture than it actually existed. One of the signs of Andersen's effect was the increased reliance on external directors and auditors with a smaller personal share in the Finial of NCIAL. Their objective views could reveal more information than the auditors who are too closely tied to a company that could experience pressure on the return of a positive audit to get more work in the future. Accounting companies have also developed stricter ethical instructions to deal with specific concerns about the conflicts of interests that could disrupt the justice of their work.

For shareholders, it resulted in more detailed and more accurate annual reports and other accounting documents. Reforms of accounting procedures have also been designed to increase the confidence between consumers and the general public that wanted to be certain that companies took accounting seriously. The government also participated in the legislation to reduce abuse, while the accounting industry has taken over an active role in the development of more efficient standards and procedures.