As an analyst at a Policy Think Tank (choose one between Brookings Institute, Center for American Progress, Rand Corporation, or Heritage Foundation), you must conduct research

Source: A Sad Tale: The Demise of Arthur Andersen Case financial data from annual reports, SEC court filings, LexisNexis or other news sources, Bloomberg Terminal, or other source.

Assignment: As an analyst at a Policy Think Tank (choose one between – Brookings Institute, Center for

American Progress, Rand Corporation, or Heritage Foundation), you must conduct research on select public

accounting firms, including overview of the industry, public sentiment, and regulatory framework before

and after the enactment of the Sarbanes-Oxley Act (SOX). The impetus for this analysis report is to

recommend to your manager whether the SOX Act should be continued, modified, or repealed.

ANALYSIS REPORT MUST INCLUDE (narrative of your research and analysis with supporting tables, charts and graphs, as appropriate). The report must be no more than 4 pages. As appropriate, any computations must be provided in an Excel spreadsheet as a separate file. There should be only two files submitted (report with embedded charts, tables, graphs, and Excel worksheet).

(1) Background: Provide an overview of the selected Think Tank’s mission as it relates to the SOX policy

and highlight why your selected Think Tank is best suited to author this report. Provide brief

historical discussion of the problems with Arthur Andersen and other public accounting firms,

especially your assigned firm which was the impetus for the SOX legislation. Conduct research and

analysis of the public accounting firm industry and the need for more regulatory control prior to the

implementation of SOX.

(2) Before SOX (1999-2002): For your assigned firm, conduct research on the industry operations,

competitive landscape, and industry outlook for public accounting firms which may have contributed

to the need for SOX. This research should include:

a. Comparison of market share by revenue of your assigned firm compared to the industry

(especially to top five firms);

b. Comparison of industry ratio analysis, especially profitability ratios of the industry

compared to your assigned firm;

c. Conduct analysis of revenue percentages, staffing levels, and operations focused on

consulting services, audit services versus other services for your assigned firm as compared

to the industry;

d. Discuss complaints and concerns about the ethical operations and performance quality of

your assigned firm as compared to the industry; and

e. Discuss other pertinent information that provides insights into the impetus for SOX.

f. In your narrative, answer Q1 from the source case.

(3) After SOX implementation (2003-2006) until the conviction of Arthur Andersen is overturned: Conduct

research on the competitive landscape of the top public accounting firms after implementation of SOX

until the Arthur Andersen conviction is overturned. Highlight how your assigned firm may have been

advantaged or disadvantaged by the implementation of SOX and Arthur Andersen’s conviction. This

research should include:

a. Comparison of market share by revenue of your assigned firm compared to the industry

(especially, the top four accounting firms);

b. Comparison of industry ratio analysis, especially profitability ratios of the industry

compared to your assigned firm;

c. Conduct analysis of revenue percentages, staffing levels, and operations focused on

consulting services, audit services versus other services for your assigned firm as compared

to the industry;

d. Discuss complaints and concerns about the ethical operations and performance quality of

your assigned firm as compared to the industry; and

e. Discuss other pertinent information that provides insights into how the implementation of

SOX impacted your assigned firm.

f. In your narrative, answer Q2 from the source case.

FIN 620 Demise of Arthur Andersen Ethics Case – Final

updated

(4) Revisit impact of SOX on public accounting firm industry (2019-2023): With a focus on how the public

accounting industry, especially your assigned firm operates in a post-SOX era. Discuss how

complaints and concerns about the ethical operations and performance quality of public accounting

firms changed. This research should include:

a. Comparison of the market share by revenue of your assigned firm compared to the

industry (especially the top four firms);

b. Conduct revenue analysis (ROE, ROA, and Profit Margin) of your assigned firm compared

to the industry;

c. Analyze percentages of revenues from consulting services, audit services verses other

services for your assigned firm compared to the industry;

d. Discuss complaints and concerns about the ethical operations and performance quality of

your assigned firm compared to the industry; and

e. In your narrative, answer Q3 from the source case.

** market share includes all public accounting firms

(5) Evaluation. Based on your research and analysis above, especially related to the operations

and performance of your assigned firm is the SOX Act still needed? Recommend whether the policy

should be maintained, updated (discuss how), or repealed. You may include past and current

information about issues related to public accounting firms to inform your recommendation.

Report Format. Submit one Microsoft Word file or Adobe (*.pdf) file with all tables, graphs, figures

embedded:

❖ Title page with your name and selected Think Tank.

❖ All the sections must be properly labelled using the sections listed above.

❖ All required sections must be included.

❖ The report must be written for the target audience and be free of typographical and grammatical

errors.

❖ Include page numbers.

❖ Consistent font size and type. At least 12 font for text and 11 font for graphs and charts. Preference is

single-spaced.

❖ Title page and references are not included in the page count.

❖ Include references, as appropriate.

❖ Submit report via Canvas before 11:50pm on the due date.

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