All these debts were covered by shareholders through affiliation with other companies, deceptive accounting and illicit loans. The major reasons behind the company’s bankruptcy can be associated with Enron’s management. Contextually, those who were responsible for managing the activities of the company had involved in transferring Enron’s fund to their personal accounts and made fake balance sheets to depict a rosy picture of the company’s financial health. The people involved in such unethical activities were none other than the company’s executives and auditors. The collapse of Enron occurred due to the reason that Enron’s executives failed to perceive the relevant ethical issues. The disparaging power of individual greediness and pride was exaggerated by the Enron’s corporate culture that supported creativity and risk taking (Johnson, 2003). 2. Analyses of Key Elements of Enron Scandal The Enron scandal had a major impact both internally to the organization including shareholders, directors and employees as well as externally to the organization comprising auditors, creditors and regulators. The major people who benefitted from Enron’s scandal were Enron’s senior managers Kenneth Lay, Jeff Skilling, Andrew Fastow and Arthur Anderson (Petrick & Scherer, 2012). Kenneth Lay was the Chief Executive Officer (CEO) and the Chairman of the Board of Directors of Enron from its creation in 1986 till 2001, when he stepped down as CEO but remained as Chairman. Kenneth Lay and Jeff Skilling were responsible for manipulation of firm’s statement of financial outcomes along with making false and misleading statements about the Enron’s financial performance. Andrew Fastow, Chief Financial Officer was found to be guilty related with participation in the manipulation of Enron’s financial statements through Special Purpose Entities (SPEs) under his control and self benefitted in violation of his responsibility to Enron’s shareholders through business with such SPEs (Monnet, 2006). Arthur Andersen, one of the world’s five leading auditing firms, was found to be guilty of making off-the book-partnership to conceal debt and augment executives’ wealth, destroying documents and obstructing justice (Petrick & Scherer, 2012). Enron’s top management’s involvement in such fraudulent activities destroyed their personal as well as business status. Both individual along with institutional investors’ incurred losses amounting to millions of Dollars as they were misinformed about the financial health of the company. Employees were also tricked simultaneously which resulted in evaporation of their retirement portfolios. The federal government was also affected because America’s political practice of chartering only enterprises that provide the public good was desecrated by enormous public stakeholder harm by few aristocratic mistreatments of power performed by wealthy elite (Petrick & Scherer, 2012). There were a number of conflicts of interest within the Enron scandal. Auditors were reluctant to disclose actual position of the company with a fear of losing their clients. At the same time, the executives were also lured towards making short-term gains rather than focusing on the company’s performance and ensuring greater return to shareholders. The top level managers and CEO were assigned to perform their tasks with utmost honesty and integrity. Simultaneously, they were responsible
Case Study: Ethical Behavior in Accounting and Financial Management 1. Overview Enron Corporation founded in 1985 was a United States based energy company located in Houston, Texas. The corporation was the biggest independent developers and producers of electricity in the world…
Creative accounting is an innovative yet unethical practice that converts the sense of an accounting treatment while being within the scope of treatment prescribed by accounting standards. It can be said that taking advantages of the loopholes present in accounting standards is the other way of explaining creative accounting.
Two of the big scandals that led to the lack of confidence of people in the work of accountants were the WorldCom and Enron debacles. The Enron case at the time represented the biggest bankruptcy in U.S history. The executives of Enron cooked up the books and stole millions of dollars for their personal wealth.
This study would include the financial analysis of TEC, so as to ascertain whether one should buy 15 percent stake of the company or not. As far as the income state is concerned, it can be seen that TEC has been able to achieve a net profit of $119,700 in 2012, which in comparison to 2010 and 2011 is higher.
Corporate scandals such as the collapse of Enron invariably turn the attention of the public to the ethical stance of accountants and the ethical values of financial analysts and evaluators as also their claim to professionalism. Professionalism is clearly associated with ethical integrity and this is especially true on the case of financial reporting and accounting.
The strategy has been carefully formulated in proper alignment with the objectives and the vision of the company. The key role of the proposed plan is to utilize and integrate the raw information from different spheres of the organization to aid organizational
cal and generally practised accounting procedure that have shaken the confidence in large corporations and accounting firms of late, but rather their moral and ethical intention behind those practices that have come into question. The virtue of independent auditors has suffered
It is only concerned about the rent it has to pay.
In case of condition 2 when Clearday wishes to own an airplane so that they do not have to rent it then, they are faced to some other additional costs like the cost of maintenance etc. Even
However, after years of international and domestic extension of its business involving many complex deals and contracts, the corporation acquired billions of Dollars in debt. All these debts were covered by
reasingly important for a business to survive in the currently highly competitive corporate sector, organizational leaders have found themselves having to plan for both long-term and instantaneous projects, goals and objectives. Mergers and acquisition have continuously been
4 pages (1000 words)Essay
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