Arthur Anderson conflict

The Arthur Andersen and Enron conflict is extensively covered in the context of the Enron scandal. A critical aspect was Andersen's dual role as Enron's auditor and consultant. This created immense conflicts of interest, as Andersen was making significant revenues from both roles. Enron was Andersen's largest client, generating $50 million per year split between audit and consulting fees. The reliance on Enron's business incentivized Andersen to overlook or permit questionable practices to retain their client, such as the use of controversial mark-to-market accounting 1.

The conflict escalated amid Enron's collapse, with Andersen going as far as sending an email instructing the destruction of documents related to Enron, anticipating potential legal investigations. This email directive was unprecedented for Andersen and further highlighted their complicity in Enron's misconduct 2.

Additionally, despite skepticism from Andersen and initial rejection by the SEC, Enron's Jeff Skilling compellingly argued for the controversial accounting practices, eventually securing SEC approval. Unlike others involved who had financial stakes, the SEC's approval was notably given without an apparent conflict of interest 3.