Unethical Behaviors of Fannie Mae Deana Deming ACC/291 December 19, 2012 Sam Adelusimo Unethical Behaviors of Fannie Mae Unethical behaviors happen more often than people think. Fannie Mae is a huge mortgage lending company known for recent unethical behavior. The senior executives manipulated financial statements to collect millions of dollars in undeserved bonuses and to deceive the investors ("Nbcnews.com," 2012). This unethical behavior became a national news story. This company clearly did not follow the Generally Accepted Accounting Principles put in place by the Securities and Exchange Commission or SEC.
Lessons learned: Auditing firms can be held responsible for the misrepresentation of financial information if they don’t practice due care. Auditing firms should asses risky accounts and suspicious transactions to ensure the reliability of the financial statement. Questions 1. Identify legitimate business practices that corporate executives can use for the primary purpose of manipulating or “managing” their company’s reported operating results. Are such practices ethical?
Sarbanes-Oxley Act of 2002 The Sarbanes-Oxley Act of 2002 was an act passed by Congress in 2002 in order to protect investors. It was made and passed in response to scandals, such as the Enron and Tyco scandals because such scandals lowered the confidence of the investors and hurt businesses. One example of a fraud is WorldCom's line costs. They were very different from their competitors' line costs, and that alerted people to the possibility of a fraud (Accounting, 2009, p. 699). The Sarbanes-Oxley Act basically forces companies to disclose any information about any type of organizational risks (Abrams & Yellin, 2003).
Introduction The intention of Sarbanes–Oxley Act (2002) was to avoid probable scandals and restore shareholders’ assurance. It was enacted as a response to many corporate and accounting frauds like Enron, WorldCom and Tyco International. Role of Sarbanes-Oxley in corporate accounting and reporting: One key section of the act conditions for use of non-US GAAP or proforma financial information and internal control over financial reporting. Companies registered in the US should disclose financial reports in accordance with GAAP with a reconciliation of the differences between this and the non-GAAP measure. Internal controls over accounts reporting include procedures that concern to the safeguarding of records that correctly and fairly reveal the transactions and dispositions of the assets of the issuer.
Yes, he did not conduct himself with the responsibility of a CEO by being fully aware of what was happening in the company. I think that he did not know what was occurring. If he had known, he should have seen that revenues were overstated. This lack of proper governance was a big part of Enron’s undoing. 6.
Greed is a powerful motivator, in this country we have many people and events in history that show us how powerful of a motivator greed can be, from people like Andrew Carnegie, to the gold rush. Greed has motivated people to great lengths throughout history, and greed has taken this country and made the United States the superpower it is today. The cycle of business can be broken down into very simple steps. People turn their greed into services and provide services to other people for money. A business is then formed from these people, and they become business people.
Madoff Case Bernie Madoff has become known to many people as the man that perpetrated by far the largest scam in the history. His reputation of a successful investor, financial genius, and a chairman of NASDAQ took a turn for the worst when his so called split strike conversion strategy turned out to be nothing but a huge Ponzi scheme affecting thousands of investors from around the globe. How we can understand a white collar crime, that represent a $65 billion on gains and almost $18 billion of looses to investors. Well, the case that I will present is the one that almost freak out Wall Street. The case of Bernard L. Madoff will remain etched in the memory of investors and traders for the unparalleled example of Ponzi scheme that it set and as the most financially devastating crime.
However, he had become more and more greedy. Finally, he manipulated the company’s resources to use for his personal purposes, which is the beginning of the end. The case discusses unethical and illegal actions taken by Tyco’s former CEO Dennis Kozlowski, CFO Mark Swartz, and some other members of the board of directors. Those actions have caused much damage to Tyco Corporation and led to the criminal investigation by the court. According to the author’s viewpoint, many scandals have happened because of the following illegal behaviors.
This case provides details of some of Arthur Andersen’s court cases that led up to the firm’s demise, as well as aspects of the company’s corporate culture that allowed for misconduct to occur. Some of the problems with its corporate culture involved being excessively focused at gaining high-profile clients at all costs, and providing an employee incentive system that inadvertently encouraged misconduct. The case also considers the ramifications of the firm’s actions on various stakeholders, including its contribution to the passage of the Sarbanes-Oxley Act of 2002. The firm placed excessive weight on growth and profits at all costs, even at the expense of its stakeholders and clients. Arthur Andersen also endowed inexperienced employees with too much power, allowing them to make decisions that were beyond their skill set.
Considered a white-collar crime, Mr. Madoff broke the law and deceived clients and investors in order to amass millions of dollars. The ethical issues came about when Mr. Madoff utilized his new investors’ money to pay off the earnings of his existing customers, instead of actually investing the funds he received from his new investors. In an effort to keep the scheme going Mr. Madoff was on a constant quest to gain new investors. Although Mr. Madoff’s legitimate business was not based off of fraud, according to the reading, there is evidence that he occasionally injected funds from his illegal business into his legal one during times of low revenues (Ferrel, Fraedrich, Ferrell. pg.