Unique Features and Critical Implications of an Audit Case

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From a legal liability perspective, the unique features of the audit case relating to Arthur Andersen’s audits of Enron Corporation concern the responsibility to look for fraud. Arthur Andersen was responsible for protecting the public interest from any fraudulent dealings Enron Corporation was perpetrating. Although the auditing company had a duty to Enron Corporation investors who relied on its financial statements, it did not have a responsibility to look for fraud. Until 1997, it was required for an auditor to report any fraud if they discovered it, but it was not their responsibility to actively look for it. However, since Arthur Andersen had a conflict of interest (the auditing company was r...