I think that a business leader needs to act and conduct themselves in the best interests of their employees, and clients. This paying of multi million dollars spent on bonus for the executives is a huge ethical dilemma. The tax payers didn’t even get their money back prior the disbursement of the bonuses. This is the type of leadership that is stewardship but with bad unethical decisons As a leader, you can put the needs interests, and goals of others above your own and use your personal gifts to help others achieve their potential. The questionnaire in Leader’s Self: Insight 6.2 enables you to evaluate your leadership approach along the dimensions of authoritarian leadership, participative leadership, stewardship, and servant leadership.
The 3% interest, or $11.5 million dollars, was made to look like it was invested from Chewco’s general and limited partners (Brooks, 2007, p. 97) Then the development of LJM1 and LJM2 were used to make the Enron financial statements seem favorable (Brooks, 2007, p. 100-101). Enron employee, Kopper, was managing Chewco was reporting to Fastow. These employees were not looking out for the best interest of Enron or the investors and instead were interested in their own benefits. 3. Did Enron’s directors understand how profits were being made in this segment?
That ethical problem goes hand-to-hand with the behavior of the employees. As mentioned before the firm was selling stock to their client of companies that didn’t exit and played with the market to increase and decrease the price stock. The firm said that they were legit because they used what it is called a bridge financing. Bridge financing is a method of financing used by companies before their IPO, to obtain necessary cash for the maintenance of operations. This is legal as long there is no connection between the firm and the investor.
Review of Accounting Ethics: Le-Nature’s Inc. ACC 557 – Financial Accounting Professor Timothy Creel Current Regulatory Environment Given the corporate ethical breaches in recent times it calls into question whether the current business and regulatory environment is more conducive to ethical behavior. While there is a general mistrust of corporate business operations, creating a need to publish the top trustworthy companies each year, the business and regulatory environment has increasing improved current corporate ethical behavior. Public scrutiny by consumers who choose to affect bottom-line profits through boycotts and demands for company change have caused some ethical improvements in corporate operations. The expansion of the Occupational Safety & Health Administration’s (OSHA) Whistleblower Protection Act of 1970 also protects employees who report violations in various workplace areas including financial reform and securities (US Department of Labor). This has created an environment where businesses practice more self-regulation.
Ethics play a role in everyday business. Company executives attempt to build a profitable organization but unethical decisions lead to the demise of organizations because of greed and power. Penn Square Bank and Dow Corning both made decisions in their business that started out making millions of dollars but in the end cost the companies more than possibly imagined. Because of the unethical decisions made by both companies they acquired large losses of money by one filing bankruptcy, and the other closing down. Not only were there large losses of money for both companies, but the loss of reputation as well.
In addition, an inherent conflict of interest exists when management, which has the responsibility for preparing financial reports, cannot impartially report on its own achievements. In this case study, we consider the possibility that a Publicly Traded Company’s (PTC) auditor discovered in the firm’s financial statements activities that were masking economic realities through active manipulation of earnings. We will discuss current income-smoothing strategies and tackle the issue of whether they are ethical. Data included in our research will provide the Board points to consider when determining the standards to follow regarding policies of income smoothing at PTC. It should also be considered that managers in the financial reporting department may feel their positions are contingent on positive earnings results.
Checkpoint Week 2 Answer the questions to 1, 3, and 4 1. What did Arthur Andersen contribute to the Enron disasters? Anderson is a company accountant his job is to review, and report the state of the company. The investors, and public could for see the chance of entrusting Enron and to invest in the company. Anderson didn’t do this.
In order for us to better understand whether the cash basis of accounting or accrual basis of accounting provides more reliable information, we conducted three interviews with industry professionals. In general, we did not want to steer the comments and opinions of the professionals we interviewed, so we merely posed the question “Is accrual basis accounting or cash basis accounting more reliable? Why?” The first interview conducted was with a C.F.O. of a company who provides outsourcing services which include financial record keeping, mutual fund accounting and advisory for corporations. After conducting our interview, the professional believes that the reliability of financial reporting should reflect the flow of resources or economic value of the company rather than focusing on the flow of cash alone.
106 and 107 • WorldCom: 1, 3, 4, and 5 on p. 118 Enron 1. Which segment of its operations got Enron into difficulties? The ethical conflict of Kopper’s appointment to Fastow, while he was still employed by Enron, was one segment that caused Enron to get into difficulty. Another segment was that Enron booked revenue for services when those services had not been performed. Also, instead of paying stocks in cash, they were paid with promissory notes.
It serves company’s owner, investor and creditors instead of company’s business. Both AICPA and IMA discuss the importance of integrity. Accountant helps company to make a good business decision and helps investors to make a good investment. It is very important for accountant sharing all the information without hiding any negative information. Besides, the accountant has to be objective when helping clients to make investment decision.