The general public and news reporting agencies would have created uproar. SCOTT SULLIVAN: Scott Sullivan, the CFO of WorldCom was not acting in an ethical manner whatsoever. Once he found out about the internal audit and the findings, he started asking questions to those in charge of performing the audit. Why would a CFO be so concerned about an internal audit now, when there been so little interest in the past? Sullivan started to become more involved in the internal audit.
Materiality is defined by the FASB as an omission that would affect a normal person by a misstatement such as using earnings management to skew the true earnings or revenue. This calls in to play the unethical behavior that earnings management places on the public (violating AICPA Code of Professional Ethics). SOX further required management and accountants to be cognizant of the material errors that financial misstatement and false reporting could have from an ethical standpoint. It holds them accountable for all financial reporting from their company. This includes criminally and financial accountability.
Enron Corporation 1) Describe how Enron could have been structured differently to avoid such activities. The law required Enron Corporation to describe its party transactions to shareholders and the member of the investing public in numerous of different disclosure documents. Enron withheld information that were disclosed which ultimately was important for understanding the meaning of transaction. They disclosed that there were large transactions that the CFA had interest. Enron Corporation did not give the CFO’s factual or expected benefits from these previous transactions or provide financial statements in its entirety.
• Though there was a Robust ERP system, the system failed due to major inconsistency of important information across different parts of the corporation. This made it difficult for executives to monitor and compare performance. • Even with Data warehouse initiatives, there were issues of the technical expertise required to extract meaningful data from the warehouse and data useful for predicting the future. • SYSCO’s competitive advantage was dependent of the decision of Twila Day to implement the BI Software, which would give SYSCO an advantage over its competitors. Initiative Objectives/Benefits No Objectives Benefits 1. Business Intelligence Software gave users access to data that was relevant to them • Avoid the need for employees to write complicated database queries or engage in programming tasks.
(Osmond, 2014) Accountants do not always follow the moral guidelines set out by the company’s managerial accounting and thus creating ethical problems within the business. The resultant effect of not following the set out moral values is that stakeholders lose confidence with the company’s financial stability. Ethics will be important in ensuring that the accountants always prepare the books of account in time and update them in time. The accountants will also be in a position to report correct, accurate and ethical information on the financial position of the organization (Osmond, 2014) Managerial accounting is characterized by forecasting for the future sales of the business. It focuses on the users of the company’s business details.
Describe how professional values and ethics can influence career success: As previously defined professional ethics are a moral value one takes in the specialized knowledge of their business which can discern over time. Most business owners are generally in dispute with moral obligations and ethical conduct in the work place environment. For instance, some business owners may have clients that receive special benefits or items that they can sometimes bribe or use to their advantage. This is both ethically and morally wrong. Although it would appear wise to accept gifts or provide gifts to another company to earn their business you are in fact interfering with normal business practices and in most companies can be a reason for termination for such actions.
Most corporations state that they did not realize that they had a high risk of fraud, which causes one to ask whether fraud could be prevented (Samociuk & Iyer, 2010). This is often because most companies base their operations on trust among their employees, which often leaves a company vulnerable to the idea that their employees will work honestly. This is
For the CPA, it is essential that the client and external financial statement users have confidence in the quality of audits and other services. If users of services do not have confidence in physicians, judges, or CPAs, the ability of those professionals to serve clients and the public effectively is diminished. 2. Explain why the ethical requirements of the CPA profession differ from those of other professions. Because CPA firms have a different relationship with users of financial statements than most other professionals have with their customers.
Corporate governance is the framework by which business companies are coordinated and controlled. After the chute of Enron, a few directions, including an emphasis on hostile to extortion and shriek blower procurements and the potential effect on stock costs, have constrained reviewers to play a more dynamic part in corporate governance. One of the real administration issues conveyed to light by the insolvency of Enron was the irreconcilable situation required with having money related officers of an organization with both oversee and be value holders of elements that directed huge business exchange with Enron. The Institute of Internal Auditors display that paying little heed to the reporting relationship the association picks, there are key measures that will guarantee that the reporting lines bolster and empower the viability and autonomy of the inside review capacity. (George Bacovia, 2013) The concept of corporate governance can be divided into two components: a) A behavioural one, stating to the associations between the company’s managers, shareholders, employees, creditors, customers, suppliers, the State and numerous interest groups b) A normative one, which includes an outline of guidelines based on which these relationships and behaviours are approved
Some companies make an decision that stop providing the service to these unprofitable customers. It can be considered as a customer divestment strategy. In fact, divesting unprofitable customers is risky in some situations. To make right decisions, managers need to analyse the major characteristics of unprofitable customers then find the risks of divesting unprofitable customers. Unprofitable customers can be understood simply as people who bring nothing and even make bad debt for your company.