1 The accountants in this case faced with ethical dilemmas are: .Rusell Smith; Helen Shepherd ; Roger Schlonsky and the subordinates. The accountants in this case who faced ethical dilemmas were Russell Smith and William Kaye . They both were instructed by top management to practice unethical accounting . Russell Smith was told to sign an affidavit stating that United Airlines (UAL ) paid Cardillo 203 ,000 for an unspecified transaction and that Cardillo 's equity was more than 3 million . Had he succumbed to the pressure inflicted by his boss , A Walter Rognlien , false documents would have been presented in court in favor of Cardillo .
I agree with you that this rule may have reduced the likelihood of this fraud. According to the case, the conspiracy began in 2000, shortly after Ebbers' bank started calling in his personal loans because of the company's falling stock price. He faced the decision to either lie or admit WorldCom financial position. Ebber’s borrowings from the Company and his loans tie with the company’s stock performance put him under pressure to ensure that WorldCom stock price does not decline further. He began falsifying the books to give the impression that WorldCom was doing well.
There are many reasons corporations and employees decide to choose unethical practices when dealing with accounting. Greed is the first reason employees are unethical. According to Oseni (2011) “Consider, for example, how greed overtook concerns about human welfare when the Manville Corporation suppressed evidence that asbestos inhalation was killing its employees, or when Ford failed to correct a known defect that made its Pinto vulnerable to gas tank explosions following low speed rear-end collisions” (pg.3). Greed is hard for some to resist. A struggling company may see cheap shortcuts that may save money.
Abstract The problem to be investigated is looking into shades of gray and how it is applicable to ethical behavior. For many years, corporations, both large and small, operate their day to day business practices within the guidelines as established by the laws written by society but yet, still manage to display very questionable behavior. Companies such as Goldman and Sachs were found to be utilizing questionable trading practices so as to increase their financial profits while at the same time leaving many companies behind in ruin and eliminating thousands of jobs in the process. Ethics is more than doing what’s right or wrong, it is a way for balancing the system so that all businesses have the same opportunity. Actions constituting a Shade of Gray.
Citigroup Merger Scheme The film The Inside Job provides a in depth look at the various ethically ambiguous business practices that take place in The U.S. and around the globe which helped spark the financial crisis of 2008. One such practice, the merger of Citicorp with Travelers, used morally questionable business practices in order to become the largest financial services company in the world. In 1998 these two companies merged to become Citigroup. The problem with this merger was that it was illegal, and a clear violation of The Glass-Steagall Act, which was enacted on the heels of The Great Depression in 1933. This Act prevented banks with consumer deposits from engaging in risky investment banking activities.
Out of the many parties in the league and the major force behind the debacle of Enron concern Andersen's, the accounting and auditing firm that once deserved name in the industry for its conscience in accounting professional services and auditing. The interesting feature is that some compromise in the profession of accounting services by Andersen's was notable, given that there are noteworthy feature of stock manipulation, especially in financial statements of Enron attended and audited by Andersen's. 2. List three types of consulting services that audit firms are now prohibited from providing to clients that are public companies. For each item, indicate the specific threats, if any, that the provision of the given service could pose for an audit firm’s independence.
Others believe the long prison sentences for individuals involved in these fiascos are too severe for the crime they have committed. Ethical behavior is vital in the success of businesses. A writing in the (referenceforbusiness.com) defines business ethics as “principles and standards that guide behavior in the world of business)”. Immoral behavior and unethical practices dissolves mutual trust in the business community. Ex-CEO of WorldCom, Bernard Ebbers was convicted by a federal grand jury on nine counts of conspiracy, securities fraud and false regulatory filings in an $11 billion accounting fraud at WorldCom leading to largest bankruptcy in U.S. history.
This arrangement involved the exchange of insider information and the awarding of a multi-billion dollar government contract. In addition to these unethical practices Boeing’s Chief Executive Officer (CEO), Phil Condit, was caught having extramarital affairs. Although these issues were solely individual decisions, their actions affected Boeings leadership image, the ability to secure future contracts, severe financial losses, and the pride of 160,000 employees. According to Loren Thompson, a defense analyst at the Lexington Institute in Arlington, Va. "Under Condit, engineering skills and ethics seemed to lose sway
Enron’s corporate culture placed its attention on the executives in the corporation and the amount of money that could be made for them (Ferrell, O. C., Fraedrich, J., & Ferrell, L. 2010). This is shown through the evaluation of Enron’s compensation plans. These plans tended to show that the corporation was less interested with providing profits for shareholders, and more interested in providing wealth to the executives within the organization. With this information becoming public, I feel that this behavior assisted in the destruction of Enron, leading to the filing of bankruptcy. 2.
Unit 1 Project Separation of Consulting and Auditing Firms Independence is a critical component of being able to successfully audit a company. An auditor loses independence when focus lies on the company and not working separate from the company. This was the case of Arthur Anderson and the organizations involvement with Enron as an auditory and a consultant. The Enron case shook up the financial market and caused many investors to question the accuracy of financial statements. The fear brought many negative affects to the finances of companies and to the areas of auditing and consulting.