This website uses cookies to ensure you have the best experience. Learn more

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...

Other Papers Like Bigger Than Enron

Fogarty Case Newacc Essay

1630 words - 7 pages such momentum. The key for an individual in similar circumstances is to not let it get started. The small compromises and acquiescences may lead to bigger ones in the future. Never underestimate the power of those with money at stake (clients or auditors) to redefine the situation in their favor. This provides the auditor with a need to be eternally vigilant. Both Andersen and Enron were far-flung enterprises filled with hard-working and honorable

Faith Integration Essay

871 words - 4 pages Accounting scandals such as Enron, Worldcom, and Tyco have destroyed major corporations and has severely shaken our confidence in business ethics and overall morals. A verse that comes to mind when you think about how these executives in those corporations have taken advantage of their employees, creditors, suppliers and other corporations in order to make extra profits and bigger bonuses is found in the book of Proverbs. According to the word

Importance of Ethics in Accounting

1086 words - 5 pages license or certificate to practice, and any ethical violations will be referred to the appropriate law enforcement agencies while the serious violations will be turned over and handled by the Securities and Exchange Commission (SEC). However, since Enron the decision making process is more aligned with the activities of showing proper moral behavior, causing companies to have a bigger respect to the laws in place; therefore, avoiding penalties of

Evolution of Business

1572 words - 7 pages an end by exploiting resources that benefitted them in the short run rather than the long. This is what wright explained in the book to be a “progress trap”. “Progress trap is when human ingenuity, in pursuing progress, introduces a problem(s) that it does not have the resources or imagination to solve, preventing further progress.” Here is where a similarity between the huge 62 billion dollar company Enron and civilization Easter Island come

The Numbers - Book Report

2149 words - 9 pages than 2 months for Enron to collapse due to its financial fraud where many people lost everything including some company employees. The biggest problem with Enron was that its accounting was very complicated and the tricks they used were “mind-numbing.” Enron hid losses and had booked fake profits by using their accounting of “mark-to-market.” The demise of Enron showed the world how bad corporate accounting had become. With Anderson

Arthur Andersen Llp

2907 words - 12 pages 2001 was approximately $75 billion. In the mid-1990s, Andersen hired Enron’s entire team of 40 internal auditors. It added its own people and opened an office in Enron’s Houston headquarters. With more than 150 people on site, Andersen staff attended Enron meetings and provided input into new businesses and other strategic issues. While the revenues from Enron represented a small fraction of Andersen’s overall revenues, they were a large

Financial Accounting

1857 words - 8 pages give the best advice to their clients on where to invest their money or what to do to make business earn the maximum profit. They are also there to explain the billing invoices and accounting policies to the society. An accountant can be said as a caretaker but they are also disaster sometimes. For example is the Enron fraud case. Enron was the seventh largest company in the world. They had been awarded as the most innovative company for

Forensic Accounting

1075 words - 5 pages like WorldCom and Enron to get away or only end up with a milder outcome than the robbers who may physically go out and do it with a gun. Of course, debating the overall of the current democratic systems is beyond the scope of this paper, but the evolution of democracy has led to this paradox in policymaking. The paradox is that there are two different ideologies that are responsible for creating policies; on one side there is the ideology to

Sarbanes-Oxley Act of 2002

1262 words - 6 pages of 2002 will not completely eliminate fraud from happening in the bigger corporations, but it will prevent it from happening at the magnitude that occurred at Enron and WorldCom. The Sarbanes-Oxley act of 2002 will hold the management and directors accountable for their actions which will result in people paying more attention to what areas get inspected. References Kimmell, P., Weygandt, J. J., & Kieso, D. E. (2011). Accounting: Tools for business decision making (4th ed.). Hoboken, NJ: John Wiley & Sons. The Economist Magazine – Five Years of Sarbanes Oxley – July 26th 2007 Wikipedia – Sarbanes Oxley Act of 2002

How Personal Can Ethics Get

1626 words - 7 pages saying something about what she found out would definitely affect that. In reference to ethics she felt that the situation was bigger than right or wrong and the effect to the department would be devastating on a number of levels. A bond was created between the employees that had survived the downsize and have became really close, and Valerie struggled with should she let the unethical actions of her boss affect that. Decision Valerie had some

Sarbanes Oxley Law

775 words - 4 pages sector continued throughout the late 1990s as well as early part of 2000 with no laws to prevent it. In response to the very public case of WorldCom and Enron fiscal scams, the Sarbanes-Oxley Act of 2002 (commonly called SOX) was passed to protect the public and investors from unfair practices and accounting mistakes (Rouse, 2007). In order to safeguard shareholders, the president at that time President George Bush pushed for the act to get passed

Related Essays

Accountant Essay

2159 words - 9 pages used by other large companies. Enron, however, used them more aggressively and comprehensively than most to create the image of a dynamic corporation with lower debt, higher revenues and bigger profits than justified by its businesses. The purpose of this communication is to show how Enron went from being a big “market- maker” to bankruptcy overnight and the legislation that took place to try to avoid a situation like this in the future

Examining A Business Failure Essay

1175 words - 5 pages lies led to bigger lies, until Enron became the biggest corporate failure and fraud in American history” (p. 20). Contributions of leadership, management, and organizational structures The failure of Enron was contingent on a number of different factors. The three main factors are leadership, management and the organizational structure itself. First and foremost, leadership and management are two completely different issues. According to

Ethic Business Paper

1803 words - 8 pages . (Johnson, Walter 2001) What really started the losses that brought the company down were the accounting practices. By misusing and hiding the profits. Enron went down not so much because it had gotten too big not all the way because it was viewed by people to be much bigger than it really was in the beginning. By decentralizing its operations into numerous subsidiaries and shell corporations, Enron was able to hide huge derivative losses that would

The Enron Scandal Essay

2316 words - 10 pages profits made during the crisis were in part hidden by manipulating Enron's financial reserves with the help of their accountants. Enron is a corporate crime that comes to the mind of everyone who immediately associates it with the most significant accounting scandal of our lifetime. There is no doubt that scandals are deceiving unethical practices by corporations giving accountants a bad name and dragging the economy into a bigger recession. It