• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Ethical Lessons Learned from Corporate Scandals

Extracts from this document...

Introduction

Ethical Lessons Learned from Corporate Scandals Ethics is about behavior and in the face of dilemma; it is about doing the right thing. Ideally, managerial leaders and their people will act ethically as a result of their internalized virtuous core values. The Enron scandal is the most significant corporate collapse in the United States and it demonstrates the need for significant reforms in accounting and corporate governance in the United States. It is also a call for a close look at the ethical quality of the culture of business generally and of business corporations (Lessons from the Enron Scandal). The collapse of even the smallest of businesses impacts many people, and therefore even the smallest business can learn what not to do from the multibillion dollar corporation. The failure of one's business will greatly and negatively affect its employees, partners, as well as the families of each of those groups. ...read more.

Middle

The most important lesson of the Enron collapse is that every link in the audit chain including: the audit committee and the board, the independent public auditor, the bankers and lawyers that aided and abetted the misrepresentation of Enron's financial condition, the credit-rating agencies, and the Securities and Exchange Commission failed to deter, detect, and correct the conditions that led to that collapse. Although not a part of the formal audit chain, most of the market specialists in Enron stock and the business press were also late in recognizing Enron's financial weakness (Corporate Aftershocks 12). Moreover, this is a characteristic pattern in many other bankruptcies. This leads us to recommend that most of the audit functions be assigned to the stock exchanges, the only institution with the potential to capture the third-party benefits of a good audit. ...read more.

Conclusion

tax rate on corporate income is now among the highest of the industrial nations. Our tax system, much like the Generally Accepted Accounting Principles (GAAP) and for much the same reasons, is extraordinarily complex, inviting attention to the many types of legal tax shelters used by Enron (Enron Lessons). Those characteristics of the current tax system lead me to recommend that the $1 million limit on the deductibility of salary and bonus be repealed and that the corporate income tax be replaced by a broad-based tax on the net cash flow of all non-financial corporations. The corporate scandals illustrated by the Enron collapse was a serious problem, undermining trust in the accounts and the behavior of all corporations and the political support for free-market policies. Executives who are highly paid can think they are above the rules and can be tempted to cut ethical corners to retain their wealth and perquisites. Government regulations and rules need to be updated for the new economy, not relaxed and eliminated. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Accounting & Finance section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Accounting & Finance essays

  1. Peer reviewed

    The collapse of energy giant Enron.

    4 star(s)

    Instead of coming clean and reporting its shortcomings, Enron repeatedly expanded into new markets in attempt to sweep earlier ruinous transactions under the rug. In a dizzyingly short period of time, Enron had dipped its fingers into paper, chemical, metal, and fibber optics markets.

  2. The Purpose of Keeping Accurate Accounts

    Such circumstances as the state of the market and the availability of finance are important considerations here Accruals concept The accruals concept is also known as matching concepts, it states that revenue and costs must be recognised as they are earned or incurred, not as money is received or paid.

  1. Cost Accounting: Its role and ethical considerations

    Role of Ethics in Cost Accounting Webster's Dictionary defines ethics as "...the principles of conduct governing an individual or a profession: the discipline dealing with what is good or bad or right and wrong, or with moral duty and obligation; a particular theory or system of moral values".

  2. The role of a conceptual framework

    alternative accounting treatments permitted by international standards.", (http://www.accountingweb.co.uk/cgi-bin/item.cgi?id=140805&d=101&dateformat=%o-%B [accessed 29th November 2005]). By looking at the different purposes of the conceptual framework a conclusion can be made that the main purpose of the conceptual framework is ".....to provide a basis for the development and review of accounting standards, and to

  1. Why Did Enron Fail?

    In October 2001, the third quarter results were published, showing a mysterious loss. This of course set the share price falling, as investors lost confidence about Enron's long term capabilities. This was the beginning of what was going to be a difficult few months for Enron, as different scandals and information was released.

  2. This report has been produced as evidence for Unit 9 - 'Financial Services' - ...

    N/A 0.50% 0.50% 0.50% 0.50% Tesco Instant Access Savings Account 2.60% 2.80% 3.00% 3.50% 3.75% Credit card Standard - Visa and MasterCard are two of the common credit cards available. Platinum and Gold cards - these are usually available for people with higher levels of income, and have benefits attached to them.

  1. Ethical and Legal Obligations in Accounting The recent and past scandals of major corporations ...

    Several organizations are part of this private group that set the standards of accounting. In 1939, the American Institute of Certified Public Accountants appointed the Committee on Accounting Procedure or CAP. It was during the years of 1939- 1959 that the CAP issued over 50 accounting research bulletins that dealt with timely accounting problems.

  2. If You Were a Teacher How Would You Teach Personal Finance and What Lessons ...

    Current teachers typically tend to hand out sheets and a lot of mathematical tasks and this can be very tedious for pupils. This stops them from learning and taking in the information that they need. Furthermore, current lessons don?t give pupils as much responsibility as usually the examples are about another person who the pupils must budget for.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work