What AICPA Codes of Professional Conduct were violated in the Waste Management scandal of 1998?

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Accounting

What AICPA Codes of Professional Conduct were violated in theWaste Management scandal of 1998?

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The auditors did not follow many of the AICPA Codes of Professional Conduct The section that was not followed was 121001014 which falls under the Conceptual Framework for Independence under 14 Familiarity threat The auditors were faced with a familiarity threat because of their long relationship with Waste Management This caused the member to be too sympathetic to the client and too accepting of their work This was apparent because the auditors viewed the client as very important and they were afraid to lose their business The auditors were also recognized by the SEC as having an extremely close relationship that impaired their judgement when it came to the fraud In order to have abided by this rule Arthur Anderson could have rotated auditors that worked on the case or have peer reviews done on the completed audit This would have more eyes on the financial statements and hopefully it would cause someone to stand up and tell authorities about the fraud being See Answer

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