Situations of Unethical practices and Behavior in Accounting
Acc/291 Principles of Accounting II
There are so many unethical situations that can take place in corporations around the world and sometimes they can happen over periods of time without being noticed. While doing research for this paper it is amazing to learn all of the lengths people will go to in order to get what they want. We all know about Enron and the things that happened there, but I also found an ethical issue concerning Wal-Mart. An ethical issue I have never even considered is one that is talked about with Wal-Mart. Apparently they have a favoritism thing ...view middle of the document...
With talks of people getting murdered and beating the case was brought to court. Coca-Cola has been sued by union workers in Columbia for this violence against its union workers. Coca-Cola denied all claims and was found not guilty, so who knows? These two cases do not involve any type of accounting issues, but do involve ethical issues.
The types of unethical issues that are involved in accounting practices could include misleading financial analysis for personal gain, misuse of funds, overstating revenue, and understating expenses, overstating the value of corporate assets, or even underreporting the existence of liabilities, and sometimes this happens with the knowledge and cooperation of the officials. Enron fits more into the accounting issues that are unethical in corporations. They are one of the companies that caused the Sarbanes-Oxley Act of 2002 to be written and put into place. Companies such as Enron, Tyco, and WorldCom have cost investors billions of dollars when their share prices were affected by the companies collapse. The Act put into place titles and sections that corporate board responsibility that could lead to criminal penalties. Enron had off balance sheet financing, using subsidiaries that it controlled to hedge its own investments. Once on the books this inflated the profits and reduced the debt. This was able to pass because the Accounting firm employed by Enron overlooked the fact that the practices were unethical. Enron greatly inflated profits while embezzling funds.
This Act has required that corporate higher ups be responsible for whatever financial statements they sign off on. When the CEO and CFO sign off on these financial statements they must responsible for any accounting irregularities by signing authentic documents that they are aware of the accounting rules and regulations and that they will be held accountable for any errors.