Bigger Than Enron Essay

754 words - 4 pages

Lobbing of commercial and political interests in the establishing of the standards is a fact, which leads to believe that there might be large groups of the financial information users, who are interested in the particular way of reporting. If it is beneficial to them and to the market without compromising any ethical issues related to the financial reporting, if the market gains from such interests, than the standards should be formed under such influence. The question is who is going to decide if there are benefits. I guess, this is the area where the real politic starts. At this level of decision making, I think there should be people free of any political or economic pressure. However, ...view middle of the document...

In this case, the ownership of the stock makes the employees not to keep the company profitable, but rather “cook the books” in the way to get the highest profit.
In the Enron case, The Securities and Exchange Commission (SEC) and Congress conducted an investigation into Enron's collapse. The authorities re-examined the roles of corporate watchdogs, including corporate boards of directors, auditors, investment banks, credit rating agencies and lawyers. It could be that the watchdogs had too tight relations with the company's executives. That is why no one questioned the Enron's aggressive accounting strategies. To prevent such collapses, someone needs to look into the possible conflict of interest. The dilemma is that auditors should perform in the interests of the investors, but they are paid by the audited company, which makes it more difficult for them to exercise tough decisions. The auditors should not perform some particular consulting services for the firms that they audit. Another belief is that there should be more severe consequences for those committing financial crimes and causing fall of the companies.
Accountants should always carry out the public responsibility, meaning they have a responsibility to ensure that the accounting functions are performed to the...

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