Case 9 Enron 1. How did the corporate culture of Enron contribute to its bankruptcy? As our book tells us, corporate culture is shared beliefs of top managers in a company. All of Enron’s top managers believed they were above any laws, and looked the other way when corners were cut to make a profit. Corporate culture also has a significant effect on how ethical decisions are made within the company (183).
Fraud and Risk Fraud is a serious crime that affects individuals and groups differently. Whether it is a small organization or a large firm, fraud remains a relevant risk to the success of a company. Fraud that is uncovered within a company can often indicate the end of that organization's existence, which means that companies have to take special care to protect themselves as well as the many employees who depend on them everyday for survival. The advent of fraudulent cases where individuals within organizations take advantage of a company's profits through technology or other means has created an increasing important need for companies to invest in fraud risk assessments, which helps to protect the company and its members. Cases like Enron, Madoff and other fraud cases have left companies vulnerable regarding how to resolve potential problems that may be related to fraud.
Businesses became tasked with adopting and even developing the ever-evolving role of ethical leadership and exhibitors of best practices of corporate governance as it relates to the efficiency and success of businesses, their shareholders, stakeholders and the United States economy. Because of the deception and abuse uncovered in these scandals which involved executives and accountants, consumer confidence in corporate America and in accountants suffered. And who can blame them? With such blatant abuse and disregard of
The employees are affected because if something was to go wrong they may lose their job because of the company faults or not get paid like they should. Other that may be affected by this are stockholders, customers, consultants, independent contractors, and auditors themselves. Ethical Values: What ethical values are demanded of auditors and accountants? Integrity is important because it requires accountants to be honest, candid, and forthright with a client’s financial information. Objectivity and independence remain free from conflicts of interest and other questionable business relationships when conducting accounting services.
In this specific situation he didn’t have much of a choice considering stakeholders priorities that must’ve been handled by top executives; corporate environment is dealing with the pyramid scheme so I feel McKinnell did what any top businessperson would do in tough situation. So even though some may think he tried to ‘blackmail’ the Michigan legislature and governor by his statements, I believe he just chose wrong words to use and should’ve sympathized more with the people of Kalamazoo. McKinnell seemed to have been motivated by top executives that he was goal-determined to say whatever he thought was best. If I were in Mr. McKinnell’s place I would have probably done the same thing. I might have been more sympathetic and maybe tried to offer them compensation for about 3 months for them to find another job (with the consent of
Ethical Behavior in the Current Business Environment Currently, there seems to be a feeling of distrust among many Americans about the corporate environment. So many companies are being exposed for committing fraud, i.e., Enron, Tyco, Freddie Mac, AIG, etc., that it can be a challenge to believe that any company behaves in an ethical manner. However, out of the millions of businesses in this country, large and small, only a small percentage is exposed as being unethical. The corporate environment appears to be more conducive to ethical behavior. The Current Ethical Business Environment Corporations understand the importance of ethical behavior and usually have a code of conduct that all of their employees are required to follow.
Many notable individuals and business organizations have lost the public trust due to a lack of ethics and integrity. Banks that were supposedly too big to fail have filed for bankruptcy based on unethical business practices and baseball professionals have stood trial for perjury due to an obvious lack of personal ethics. These ethics will guide us at test time as students or how to present ourselves in a professional manner in the business workplace. Ultimately, it is our choice as an individual or collectively as a business organization to be committed to lives that honor’s a code of values and ethics. From the time that mankind first came together to form a society there have been morals.
Page 1 Accounting and Business Ethics Despite the enormous impact of Enron on the accounting profession, the general malaise amongst the profession more broadly, and the signiﬁcant legislative and institutional reforms that have taken place as a result, there are still surprisingly few textbooks on accounting ethics. This concise introductory text takes a broad view of ethics and accounting, taking into account contemporary social trends, such as globalization and terrorism. Rather than delineating codes of professional conduct, this text pushes the reader towards an understanding of the big ethical dilemmas facing the profession and the factors that inﬂuence the ways in which accountants frame ethical questions. The book is divided into two parts. The ﬁrst part focuses on developing thinking about the different kinds of ethical questions that could be posed in relation to accounting.
ICAS Report Planning Template Student Name Email address Phone number Case-Study or Work-Based Evidence? Introduction to business (Section 4) Which accounting function will you be reviewing? Overview of the business (PIC 1.3) How big is the business – staff, offices, turnover? The accounting function that I would be focusing on is the Purchase Ledger. ABC Ltd supplies a complete range of carpets and furniture to the general public.
Lawyers, law enforcement, insurance companies, government agencies, banks, courts and businesses often hire forensic accountants. 1) Being a well-established CPA does not mean to be an effective forensic accountant. Although forensic accounting is currently on the “hot” list of client services, there are plenty of accountants getting involved who shouldn’t be because they don’t understand the ins and outs of the niche...Many accountants think it is simply fraud investigation, and it’s not. (“AICPA 3”). It is really much more than dealing with the numbers.