Ethical Issue: Employee Responsibilities - Essay Example

Nevertheless, sometimes the most serious collapses of the companies are connected with working responsibilities neglect. A perfect example is the collapse of Enron. Two responsible managers who were accused by the court in shredding Enron audit documents were Nancy Temple (Andersen Legal Dept.) and David Duncan (Lead Partner for the Enron account) (Cunningham and Harris 2006, p. 28). The reputation of Andersen’s Legal Department was stained. Nevertheless, during process in the case Arthur Andersen LLP v. United States on May 31, 2005, it was underlined that Andersen was accused with no real proof. It was underlined also that Andersen was involuntarily involved into corrupt actions and he was also a kind of a victim in that case. Moreover, both Enron and Andersen “acted with an obvious disregard of any notion of ethical conduct. The breaches of ethics are so obvious they need not be presented in detail. Interesting issues about ethics of the legal, banking, and financial analysis professions are also apparent, but are beyond the scope of this case” (Cunningham and Harris 2006, p. 31). In other words, the accountants of the company starting from 1947 after death of Andersen were involved in malpractice and violated legal, ethical and social norms in order to gain money by fooling their clients and leading them to bankruptcy. Executives’ irresponsibility Another overlook of professional responsibility that is wide spread among executives, is their insider trading. A temptation to get involved into insider trading is great for executives. They know necessary information and want to gain profits in an easy manner. The executives of Enron sold the stock on its rise. That was a favorable situation when executives in Enron managed to sell the stocks on the rise. Misdeeds of executives led to a dreadful situation, when “those poor, helpless Enron employees whose retirements accounts vanished because they were too stupid to spread their retirement income over several investments)” (Cunningham and Harris 2006, p. 34). Employees lost their investments, executives earned big money. Thus, the crisis at Enron is beneficial for the former and disastrous for the letter. Nevertheless, the price for irresponsibility of executives was too high. Subprime mortgages at Enron Moreover, the deal with subprime mortgages and Enron still exists as a related phenomenon. It is also often supposed that “as with Enron, banks failed to disclose in their balance sheets the special purpose structures which held subprime debt” (Subprime Mortgage Crisis). Moreover, it has been documented that Enron’s special purpose entities were completely revealed in their balance sheets and also in 10K and 10Q forms (Subprime Mortgage Crisis). A lack of responsibilities of executives led to misvaluing of subprime mortgage crisis. It is beneficial for those who raised great profits, but it is destructive for those who suffered great losses. Andrew Fastow’s roles as CFO and SPE The role of CFO is usually determined in terms of financial discipline and propriety. A potential conflict of CFO role can be interpreted as a risky position: “the traditional role of policing the integrity and accuracy of the accounts and financial statements of a company, and the contemporary ‘role’ of making sure that the quarterly earnings of the company look the best that they can, even at times assisting this ...Show more