Question 2: The evidence that Anderson’s culture contributed to its downfall
Person 1: Legal and ethical practices of a firm need to be supported by a corporate culture that promotes compliance with established standards and laws.
Person 2: For Schein (2004) corporate culture is a pattern of shared basic assumptions that was learned by a group as it solved its problems of external adaptation and internal integration that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems.
Person 1: Organizational culture instills in the organization a common sense of identity. This kind of culture helps in aligning the values and norms of the employees to the values and norms of the organization.
Person 2: Organizational culture instructs a company to work as a social system. Moreover this kind of culture serves as a reference for employees whenever they have to undertake productive activities and this will help to behave better in doing the productive activities. Organizational culture gives guidance for the employees to act accordingly in various situations in the company
Person 1: Organizational culture is something that should not hinder business transactions. Organizational culture should not create issues that can create failures in transactions. Once culture becomes involved in business transactions the tendency for firms is to alter some aspects of the transactions which might not be good for the end result.
Person 1: There are three evidences that prove that Anderson’s culture contributed to its downfall. First, the culture was geared toward the maximization of the firm’s revenue.
Person 1: This culture arise not just from the competition between the consulting and accounting divisions, but by virtue of the fact that partner earnings were tied to the revenue they generated for Andersen.
Person 2: In the absence of effective corporate governance, these factors promoted a culture in which revenue growth was deemed paramount and of greater significance than legal or ethical compliance.
Person 1: This is evidenced, for example, by the case of Enron in which partners sought to retain revenue interests by providing more favorable auditing assessments of the firm.
Person 2: As Williamson (2005) mentions corporate culture is essential to legal and ethical business conduct because practices and processes within a firm are only part of effective governance.
Person1: As Verbos, Gerard, Forshey, Harding and Miller (2007) believe that a positive ethical organization answers the question who are we, ethically?’ through organizational acts and decisions consistent with the moral values expressed by its leaders and reinforced through its organizational culture and practice
Person 1: Compliance necessitates implied and formalized adherence to espoused norms, values, and assumptions, with these factors being actively promoted by senior management,
Person 2: Culture thereby embodies the desired activities and values of the firm.
Person 1: The second evidence that prove that Anderson’s culture contributed to its downfall involves the idea that culture was short term focus.
Person 1: This short-term focus arose from both the revenue interests of partners and the assumption that accounting discrepancies would not be thoroughly investigated over time.
Person 2: Evidence of this contention is gained from the cases of Global Crossing and Qwest Communications in which Andersen deliberately distorted information in regard to fake asset swaps in order to bolster revenue under the assumption that improper accounting methods would not be discovered.
Person 2: Remember that Culture refers to norms, values, and assumptions that are shared by individuals within a firm. In this respect, the short-term focus of the culture meant that long-term ethical and legal compliance were not readily promoted by partners.
Person 2: The last evidence to prove that Anderson’s culture contributed to its downfall involves the idea that culture was geared toward non-compliance and the inappropriate allocation of firm resources.
Person 1: Non-compliance to legal and ethical standards is evident in all of the cases, but stemmed by the conduct and governance of partners within Andersen.
Person 2: Inappropriate allocation is reflected in the use of junior or inexperienced auditing staff, which served to provide partners with greater discretion in espousing transparent and objective practices while also allowing them to overrule or misconstrue the audit findings of such staff.
Person 1: The implication was that the culture bred secrecy and opaque dealings by partners, as well as the deliberate manipulation of the intentions and functioning of junior staff. To summarize three evidences that prove that Anderson’s culture contributed to its downfall includes the ideas that culture was geared toward the maximization of the firm’s revenue, culture was short term focus and culture was geared toward non-compliance.
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