Arthur Andersen's double role with Enron represented a conflict of interest because _________.
A)Arthur Andersen made too much of a profit from one client
B)Enron executives did not reveal everything to Arthur Andersen that they should have
C)Arthur Andersen had incentive not to make criticisms that would hurt its consultingrole
D)Arthur Andersen did not know Enron well enough to be both consulting and auditing the company

Question

Arthur Andersen's double role with Enron represented a conflict of interest because  _________.
A)Arthur Andersen made too much of a profit from one client
B)Enron executives did not reveal everything to Arthur Andersen that they should have
C)Arthur Andersen had incentive not to make criticisms that would hurt its consultingrole
D)Arthur Andersen did not know Enron well enough to be both consulting and auditing the company

Quizplus · Accepted Answer

Arthur Andersen's dual role as both a consultant and an auditor for Enron created a conflict of interest because it had an incentive not to criticize the company too harshly in its auditing role, as that would jeopardize its lucrative consulting contract with Enron. This conflict of interest ultimately contributed to the accounting fraud that led to Enron's downfall.

Arthur Andersen's Double Role with Enron Represented a Conflict of Interest