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Case Study: Ethical Behavior in Accounting and Financial Management
Finance & Accounting
Pages 4 (1004 words)
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.
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). ...
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