Unethical Accounting Practices and the Sarbanes Oxley Act In the wake of scandals involving companies like Enron and World Com, investor’s confidence in the accuracy of a company’s financial statements was shaken. Unethical acts such as providing false information regarding expenses incurred, exaggerating business revenue, or misusing business funds are all reasons the Sarbanes Oxley Act (SOX) was implemented in 2002. Prior to SOX companies were not necessarily accountable for questionable accounting practices and company executives would take advantage of these practices for personal gain. Companies would aggressively estimate expenses occurred or exaggerate revenue to entice investors to invest money or creditors to open lines of credit. In some cases executives would misuse company funds for personal use, such as vacations on company credit cards of use of company planes for private adventures.
As the case illustrated, there were dozens of serious and valid red flags that SEC was bombarded with by efforts made from Harry Markopolos. One alternative solution is for SEC to properly review the case itself, along with closely monitoring those assigned and affiliated with the case. From reading the case, it appears that one of the major flaw can be traced back from the audit work that was performed. It’s noted in the case that Bernie Madoff presented a purely fictitious financial statements to SEC for review and nothing alarming was discovered. Furthermore the case stated that there was actually no audit work that was done, and Madoff’s cousin was the sole practitioner conducting the audit.
Andersen shunted aside accountants who failed to adapt to the firm's new direction. In their place, Andersen promoted a slicker breed who could turn modestly profitable auditing assignments into consulting gold mines. Repeatedly, Andersen rewarded those involved with the firm's most troubled clients, while guardians of the company's legacy were shown the door. The quiet dilution of standards and the rise of auditor-salesmen at Andersen are central to the scandals that have cost investors billions of dollars. Even though the leaders contended that conflicts between its auditing and consulting missions had no impact on the quality of its work but actually they do.
Every corporation is created in order to make profit and provide a service or a product to the consumer.Most consumers do not understand the complexity of the products they buy and the possible harm they could cause.Since large corporations created such a product, they alone have the knowledge of how to safely dispose of their product.Therefore corporations should provide information on their products to aid the consumer to understand the possible dangers of the products they purchase and how to dispose of them safely. Last but not least, no solution is 100% effective.There will still be pollution created by the products manufactured by large corporations. Corporations should therefore provide a solution that will minimize any loss they might make in disposing the byproduct of their products, dispose their products safely and involve the consumer in the disposal procedure, in order to educate the consumer as well as informing the consumer of what to do and what not to
The Price of Unethical Behavior: Tyco In the discussion of the price of unethical behavior, we all too often do not see the actual events that led up to the news story of a Chief Executive, Board Member, or Officer getting caught. We only get to hear about the sensational lifestyle, the total embezzled, or the years spent in immoral behavior coming to a head. How does one get away with such activities for so long and no one hear about it. The topic of today’s discussion will cover just that by looking at the case of the TYCO Corporation and their corrupt CEO Dennis Kozlowski. Who is Dennis Kozlowski?
Creative Accounting Accounting practices by Enron could be considered nothing less than creative. Enron managed to cause the California energy crisis and inflate energy costs to benefit the company’s bottom line. Further, Enron’s accounting practices changed public opinion on the dealings of corporate America. “A continual stream of revelations about Enron's deceptive financial reporting has played a decisive role in making investors wary of corporate accounting and the stock market,” (Mandel & Zellner, 2002). Investors no longer had trust in financial or accounting records and reports.
Temptations to cheat have increased not only because government deregulation. According Callahan given’s example, “Many of the recent instances of greed and investor betrayal on Wall street, for example, could have been prevented by reforms intended to keep accountants honest—or to ensure the independence of stock analysts, or to stop corporate boards from being packed with cronies, or to keep companies from handing out so many stock options”(21). It shows weaker of deregulation and arracks on government can increase temptation to cheating. But even government didn’t deregulation, people still willing to take high risk to achieve their own goal. People’s temptation is from society.
Enron Corporation Business Law Enron Corporation Describe how Enron could have been structured differently to avoid such activities. Enron could have been aware of the agents are doing to avoid all the scandals that were going on in its company. Enron should have never used its stock value as collateral to obtain loans from its partnership. The partners in the corporation should have known that these techniques were unethical as well as illegal. As stated by Gilman, Hamed, Navran & Brown (2010), the ten things a company can do to avoid being the next Enron includes: Examine your ethical climate and put safeguards in place - Corporations are composed of cultures.
Unethical professional values were symptoms of systemic problems for Enron. “Enron’s systems of oversight, ethical disclosure, and corporate accountability were flawed leading to the demise of Enron” (Schuler, 2009, para. 2). In fact, in 1999 Enron directors waived the company’s code of ethics allowing the CFO, Andrew Fastow, to run an investment partnership that traded with Enron. Enron not only committed financial fraud, but it has been alleged that bribes
Were banks the real cause of the Great Depression? The non-regulation of banks and their poorly organized practices were the major cause of the Great Depression. The banks were at fault for the damage to the Stock Market, which resulted in the Great Depression. And, the bank’s crashing affected U.S. citizens more than any other economic failure. The Federal Reserve Board did not have any set regulations to control the actions of any independent banks, so they could maintain other people’s money any way they wished, and forgo the advancements of loaning.