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    • #7370
      Lori SandersLori Sanders
      Participant

      There were many issues that led to the failure of the Andersen corporation. The first and maybe the initial issue was the Conflict of Interest within the company, splitting into two division – audit and consultation. The greed of the owners, when presented with possibility of dividing the Company into two divisions, was a key issue, causing the resignation of the Chair. Once the Chair of the Board recognized what was happening, should the board, as well as the owners been approached? Was the Board aware of how the corporation was operating, did they have the sufficient skills to understand the business and legal ramifications that could result in the change of operations in the company? After the Chair’s resignation, did the Board practice their “Due Diligence”, and did they educate themselves regarding the corporation’s operations.

      There are definitely a lot of questions to be answered regarding this case. I am very glad I was not on the board!!!

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    • #7397
      Jen BudneyJen Budney
      Participant

      Great questions, Lori. The board should have been aware of exactly why the Chair resigned — one of the jobs of the Chair is to ensure total transparency in board communications, including reasons for his or her resignation. But because reporting of financials was so complicated, it may be that the Board didn’t fully understand what it was dealing with. In any case, that is the conclusion the Supreme Court reached in 2005, when it reversed the firm’s fraud conviction, basically noting that there was insufficient evidence that the board understood what it was doing. Of course, this doesn’t mean that the Board was not at fault, but whether it was criminally at fault remains open to debate…

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    • #7420
      Walter PreugschasWalter Preugschas
      Participant

      More a question of competence of the board

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    • #7424
      Desiree VandenhovenDesiree Vandenhoven
      Participant

      I think to board knew otherwise the board chair would not have brought the issue forth to the partners. I understand the resignation yet I also find it disturbing that you step down when partners dont agree with an issue that has been brought forth and you do not like the outcome. I assume the board knew, if not, they had greater problems.
      But also if they knew, then why did they other board members stay on?

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