At Arthur Andersen there were a great number of critical problems confronting the company.

1. David Duncan, one of the partners responsible for Enron¡¯s auditing, was inappropriately misusing the accounting treatment of SPEs.

2. Due to globalization, declining fees, increasing competitive pressures to attract and retain clients caused the auditors to relax or alter their interpretation of accounting principles.

3. Changing regulatory environment- Liability exposure was assigned lower priority on the list of concerns for accountants.

4. Andersen was the ones to establish the Professional Standards Group- Andersen was the only one to allow local pa

5. Resentment on both sides was elevated as consulting became more profitable and accountants felt increasing pressure to open doors to their clients for consulting services.

Andersen had established the Professional Standards Group to provide uniform interpretations of accounting standards and principles. Andersen was the only one to allow local partners to ignore the company experts. This allowed Andersen to have more liberal interpretations of existing rules and creation of new rules. Andersen was being unethical by allowing their company to ignore the experts. They were the ones to establish the Group and should of set a good example to others, instead took advantage of the situation.

Corporate culture has caused the second problem for Andersen. Due to globalization, declining fees, increasing competitive pressures to attract and retain clients caused the auditors to relax or alter their interpretation of accounting principles. Andersen and its competitors were simultaneously rejecting

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