Try to “connect the dots” between what was happening at Arthur Andersen and Enron, and discuss how each business entity’s set of events was separate yet impacted by the other. Discuss the issue of the partner responsible for the engagement being a relativ

I don’t know how to handle this Law question and need guidance.

*have to give scholarly reply to the follow topic thread below*

At the time that Enron was growing as a company, Arthur Andersen found itself in the middle of many allegations from audits it had done on previous companies such as Waste Management and Sunbeam. In my opinion, I believe this brought a sense of pressure to the accounting firm and the possibility of diminishing profits. Enron during this time had found itself in a lot of debt from expanding its company in the wrong direction. The creation of SPEs allowed Enron to sustain the level of capital without having to report or show the true level of debt that the company had. This expanded to a greater portion of Enron, and a huge percentage of the company leaned on the money it received from this segment. These two different events that were evolving within each company placed a need for one another. Arthur Andersen needed Enron’s money to stay afloat and maintain a reputable image. On the other hand, Enron needed a stamp of approval from an accounting firm like Arthur Andersen to continue receiving its credit for the creation of these SPEs.

David Duncan, the lead audit partner of the engagement at the time, while being relatively young, I believe, had a feeling of wanting to contribute to the firm and start off strong from the beginning. Months before Sharron Watkins reached out to Kenneth Lay on its aggressive accounting strategies, she had met with a member of the Andersen firm with whom she had worked with for several years earlier. In the email addressed to the member, David Duncan was made aware, and instead of confronting the issue with Enron executives, efforts were turned to assisting the company in restructuring certain of the company’s SPEs so that they could continue to qualify as unconsolidated entities. Maybe Duncan saw this as an opportunity to gain personal power within Arthur Andersen, and so acted accordingly. However, the role Carl Bass, the quality assurance partner for the Enron engagement, took at the time was not favorable because he did not agree with the accounting that Enron adopted to account for SPEs. He probably did not care to gain personal power with Arthur Andersen, but just wanted to report his findings objectively and without bias. I believe Carl Bass took his job seriously and acted with integrity, and because of that, he was removed from the engagement. Maybe both roles at the time had different duties and responsibilities, and David Duncan decided to deal with that in a different way Carl Bass did, but the biggest mistake made was losing sight of the true purpose the audit was commenced in the first place, to assure investors, lenders, and creditors that their money was safely invested, they had that duty to the public. Not to secure the safety of the money for Enron executives and Andersen’s partner and engagement team.