Stakeholders other than stockholders can no longer be enrolled. These stakeholders include creditors, employees, customers, suppliers, communities in which a company operates and others. The impact of decisions must be recognized.
The Enron controversy resulted to different political and economic changes which affected both government and private agencies. Enron has developed into becoming a part of America's top ten companies in the span of nearly two decades. Their sudden rise to power seemed impossible to many industries in the financial world. However, the scam which brought upon Enron success was discovered.
Deception was the name of the game for Enron. They concealed their controversial and suspicious dealings and transaction with their growing debt so that they appear debt-free and admirable to stockholders and the public.
At last, every lie and cover up was made known to many when the company suddenly and unexpectedly filed for Chapter 11 Bankruptcy. That was their last resort. Not even company partnerships and affiliations could save the money and the glory of Enron.
When the news of bankruptcy of Enron was revealed, the reasons behind Enron's downfall remained unclear and uncertain. There were mixed reactions among businessmen, politicians, stockholders and others. Most of them were enraged while some felt concerned. There were those who were not surprise that the discrepancies with the financial statements could actually happen. It was as if it was the common habit among those who wish to decrease their debt.
Questions such as the reason behind the downfall as well as the possible ways and means for preventing bankruptcy rose among the interested public. What hindered the company or the government from foreseeing the end of Enron Was there money laundering or fraud behind the scandal If there was, has the laws implemented by the government sufficient to verify the financial records of Enron
To shed light on the Enron controversy, a whistleblower, Sherron Watkins, decided to confess all the financial secrets of the company. The government took its role by initiating an investigation powered up by some of the congressional committees. Aside from Watkins, other key players admitted their involvement and decided to testify while some still pleads not guilty.
The involvement of an accounting firm as reputable as Arthur Andersen with the controversy, heightened the interest of the public as well as legislators, economists and politicians.
The firm also experienced a great loss even though the verdict has not yet been announced. Their clients retracted their loyalty and shifted to other competitive firms. Some employees resigned and sought other jobs from other companies. The accounting firm did a great job on the falsification and manipulation of Enron's financial statements that the discrepancies remained unnoticed to the public and to the government.
The implications of the scandal in the political arena was expected since it had close ties with the White House due to the fact that the once prestigious company spent millions of dollars to support Bush's presidential campaign last 2002 elections.
Aside from that, Enron's chief executive had personal and friendly relationships with
Fraud detection and deterrence should be a required part of the accounting curriculum. Accounting education needs to teach future CPAs the skills to effectively meet the public's expectations in the area of fraud. This includes a basic knowledge of criminology and the laws related to fraud, the fundamentals of investigations, and the various types of fraud schemes…
The negative impact is also transferred to the national economy and the people therein. Therefore, since national economies contribute to the global or international economy, financial frauds anywhere will result in a negative impact on the international economy.
The Combined Code on Corporate Governance dictates that companies should address their Directors and also provide in training services to the Directors and the working staff so as to enable the prosperity of the company. Remuneration levels should be sufficient so as to attract, as well as retain and motivate directors and the other working staff towards working very hard so as to achieve success of the company (Nam & Jinn 2000).
(McMeeking, 2006). Only small companies are exempted from statutory audits in some countries e.g., the United Kingdom. Registered auditors are expected to express an opinion on the financial statements on whether they are free from material misstatements.
inancial reporting and to develop greater transparency in financial reporting to investors and other stakeholders” (Ferrell, Fraedrich, Ferrell 102).
It is a significant act because it shows just how important business ethics are, and the penalties that can stem from not
They have asked that you make particular reference to HR systems and controls in your report.
The increase of complexity of organizational activities worldwide has led to the limitation of the effectiveness of the measures taken for the control of
The author provides the following accounting principle. The matching principle requires firms to apply the accrual basis of accounting where expenses are matched with revenues. For example, the wages of an employee should be reported in the week that the employee worked and not when the employee was paid.
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