• 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...


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.


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.


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of the current tax system lead me to recommend that the $1 million limit on the deductibility of salary and bonus be repealed and that the corporate income tax be replaced by a broad-based tax on the net cash flow of all non-financial corporations.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)

    To put it simple, they lost their savings. They watched their nest eggs evaporate. They lost trust in both the personal and fiscal sense of the word in the system. Millions of other workers around the country who have been following the sad stories of Enron's employees have grown anxious about their own accounts and their own retirement security.

  2. Management Accounting Report.

    The Master budget that will be on the following page will the net profit for both increased and current price. Current Price Higher Price Actual Price Sales 1560000 1570800 1704000 Production Cost 650000 595000 729000 Gross Profit 910000 975800 975000 Less Expenses Factory overheads 180000 180000 174000 Business Rates 60000

  1. The Purpose of Keeping Accurate Accounts

    accordance with GAAP, must always be capitalised and no deviation should be recommended on the grounds of conservatism. Going concern Accounts are prepared under the assumption trading will be continuous. In the final accounts an example of this is the depreciation, buying a product and paying it off over a

  2. The role of a conceptual framework

    This needs to be done because it allows the users and other people to see that the presentations are the same for the different businesses and from the past records of the financial documents. The IAS 1 also shows how the financial statements should be lay out and what each

  1. Investment Portfolio - Shares and other investments

    #2 On the 12th of February, Flight Centre shares dropped 3.65% after it pulled out of an $80 million lawsuit suing six airlines for not including fuel surcharges in commissions. This may have resulted in potential losses for the company, or missing out on profit, that caused the price to drop.

  2. What does Finance involve.

    General costs: Picture Item Quantity Whole sale price Total cost Supplier Marketing & advertising/ job advertisements N/A .... �7,500.00(marketing) +�750.00( job advert human recourse) =�8,250.00 .... Uniform (apparel) 4 �3.50 �14.00 Woolworth I will buy my apparels form Woolworth because it as better price then Asda and Midwest salon.

  1. Identifying and describing the main financial service needs for a student starting at university

    Graduate Home-Finding Service (provided through Property World) and search on-line for properties for sale or rent throughout the UK. Nat west also offer a fixed rate mortgage with a preferential rate and no deposit to pay, plus a �1 valuation fee, �200 cash back and no reservation fee, and a

  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