...over the business ethics of a company that is known for one of the biggest frauds in corporate America. The company is Enron and I found an article that is titled " The Case Analysis of the Scandal of Enron" and in this article the author talks about the business practices on Enron and the unethical research they used to grow their business and in the end they ruined a lot of good people's lives, and damaged their futures. According to "Dictionary.com" (2013) ethics are the values relating to human conduct, with respect to the rightness and wrongness of certain actions and to the goodness and badness of the motives and ends of such actions. Every person has ethics and a code that they live by, but the difference is that not everyone has that same code and especially in the business world that word can be tricky for people and standing up for the code they believe in is hard for some. Unethical business practices is not a new thing, and as the economy has grown these practices have been more common. One unethical practice would be skewing the research results, or the skewing the research from your company. That is one thing that Enron did do, and they even took a step further and did certain practices that no one had ever thought of before. Enron was a natural gas company, and what they did is that they built power plants in a few different places and they took their future earnings from those power plants and recognized them as current assets, so Enron was the first to sell...
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...Ethical Analysis Kimberly Kendrick MBA/5310 January 29, 2014 Mr. Van Buskirk Ethical Analysis The problem with scams is that you never know until it is too late. People who obtain money from dishonest means could spend the course of a lifetime and never pay stakeholders back. Stakeholders and shareholders alike are in a uniquely vulnerable position which becomes clear in most business schemes (“The Biggest Stock Scams of all Time”, 2011). Corporate scandals for over a decade serve as a reminder of the inability shareholders have to effectively control management and its owners in business. In the Enron, World Com, and Tyco disasters for every employee whose job was displaced another shareholder lost on average $4 million. Enron continued to exist under Chapter 11 protection until 2004 until assets where liquidated to pay off debtors. Prior to the debacle this company was the seventh largest energy company in the U.S. based out of Houston. The controversy arose when Enron allowed investors to be fooled into thinking the company was stable keeping hundreds of millions of debt off of its books. Shell companies that were run by the organization recorded fictitious revenue giving the illusion of unbelievable earning figures ("The Biggest Stock Scams of all Time”, 2011). This deception eventually unraveled causing share prices to dive an example of their inability to use market ethics and allowing greed to overtake their common sense and use...
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...Running head: Enron Annual Analysis Analysis of Enron Principles of Management Abstract Enron Creditors Recovery Corporation was an American energy company based in Houston, Texas. Before its bankruptcy in late 2001, Enron employed around 21,000 people (McLean & Elkind, 2003) and was one of the world's leading electricity, natural gas, pulp and paper, and communications companies, with claimed revenues of $111 billion in 2000. Fortune named Enron "America's Most Innovative Company" for six consecutive years(Fortune, 2000, pg.45-50). It achieved infamy at the end of 2001, when it was revealed that its reported financial condition was sustained mostly by institutionalized, systematic, and creatively planned accounting fraud. Enron has since become a popular symbol of willful corporate fraud and corruption. The following is the 2000 annual report analysis that talks about the ethics, corporate responsibilty, organizational policies and applicable theories. ethics According to the 2000 annual report, the company values are as follows. “We have an obligation to communicate, take the time to talk to one another and listen. We believe that information is meant to move and that information moves people”(Enron, 2000, pg.55). The company had a good ethical philosophy of communication. Still if employees would communicated from the beginning some corrections would have been made and possibly the company would stills stand today. “We treat others as would like to be treated ourselves...
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...ENRON Corporate Culture Q1: Analyse the corporate culture at Enron and its management’s behaviour. Include in your analysis, the normative theory of ethics which you would consider most relevant in driving the decision making at Enron. Enron began by merger of two Houston pipeline companies in 1985, although as a new company Enron faced a lot of financial difficulties in the starting years, though the company was able to survive these financial problems (Enron Ethics, 2010). In 1988 the deregulation of the electrical power markets came into action and flipped the company from up to down, after deregulation company business updated from delivering energy to becoming an energy broker and soon after this Enron once a company struggling to survive transformed to booming one. Deregulation opened the gates for Enron to step into the market and compete with the leading competitors in the market bringing buyers and sellers in to market together (Enron Ethics, 2010). . Enron earned a lot of money from the stock exchange by trading their own shares and earning profit from the difference in buying and selling prices. Deregulation gave permission to Enron to be creative, for the first time in history a firm that was required to operate within in the guidelines could be creative and test the limits the way they want. As time went by Enron’s products and services evolved, so did the culture of the company. In this newly deregulated and creative platform, Enron embraced...
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...Prescriptive Approaches to Ethics at Enron Enron was a global energy firm that filed for bankruptcy protection in 2001. The firm’s senior managers had engaged in fraud for an extended period through a scheme in which partnerships owned by the managers could receive payment for goods and services never provided to Enron. In addition, the firm’s external auditing firm, Arthur Andersen, was complicit in the fraud by knowingly certifying false financial statements as accurate. Arthur Anderson participated in the fraud because the firm did not want to risk losing lucrative consulting contracts from Enron, which created a conflict of interest situation (Miller, 2004). The events leading to the collapse of Enron can be analyzed using the ethical frameworks suggested by consequentialist theory, deontological theory, and virtue ethics. Such an analysis can provide an explanation of the failure of Enron’s directors, mangers, and auditors to adhere to their ethical duties to the shareholders, employees, customers and suppliers of the firm. Consequentialist theory suggests that an act is ethically wrong if it results in consequences deemed wrong or harmful by the majority of people in a society (Hooker, 2002). The consequentialist theory requires assessing the actual consequences of the act, which includes both direct and indirect consequences. It also requires using some type of evaluative norm for determining whether the consequence is beneficial or harmful. The theory is prescriptive...
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...Ethical Breaches ACC 557 Name Date Instructor Introduction In recent years, accounting ethical breaches has emerged as a major problem for most of the organizations. With growth of businesses, the number of accounting ethical breaches has also increased in organizations. Accounting ethical breaches may be defined as the misappropriation and misconduct of financial data by the auditors and accountants of the company (Duska & Ragatz, 2011). The accounting ethical breaches not only affect the organization, but also the stakeholders involved with the organization. The paper will discuss the accounting ethical breach in Enron. The paper will also discuss the ethical issues, accounting ethical breaches and the recommendations to prevent such breaches. Ethical Behavior in Current Business and Regulatory Environment With increasing number of corporate ethical breaches, the role of ethical behavior has increased in organizations. The organizations are more supportive to ethical behavior ensuring risk, compliance and governance culture within organization. As a part of this culture, effective communication around ethical practices has been followed by the organization. Since ethical breaches are mainly done for the sake of money, rewarding and ethical practices has effectively helped organizations to minimize the ethical breaches (Ferrell & Fraedrich, 2009). At the same time, ethical breaches have not only affected the image of the company, but are also responsible for...
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...Ethics in Accounting By Pace University – New York Accounting for Decision Making, MBA 640 Fall 2011 Required Research Paper Page 1 of 11 Table of Contents Number Content Page Number 1 Introduction 3 2 Ethics in Accounting 4 3 Enron Scandal 6 4 Satyam Scandal 8 5 Conclusion 10 6 References 11 Page 2 of 11 Introduction • What is “Ethics”? Ethics, also known as moral philosophy, is a branch of philosophy that addresses questions about morality—that is, concepts such as good and evil, right and wrong, virtue and vice, justice and crime, etc. Source: http://en.wikipedia.org/wiki/Ethics • What is “Accounting”? Accounting is basically maintaining and providing records of transfer of funds for an individual or business. All the data collected from these records are then summarized in form of reports and statements, which are used by outside parties and the company itself for various uses and analysis. Source: http://www.investopedia.com/terms/a/accounting.asp#axzz1fbCBL2q0 Page 3 of 11 Ethics in Accounting With many scandals and scams coming out regarding the unethical behavior of firms in terms of Business and accounting, higher authorities in governments across the globe are worried. These scams are disturbing and damaging the economy at large. When the economy is already sliding down, governments have started taking extra care and strict rules are being applied to control the damage...
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...www.ccsenet.org/ijbm International Journal of Business and Management Vol. 5, No. 10; October 2010 The Case Analysis of the Scandal of Enron Yuhao Li Huntsman School of Business, Utah State University, Logan city, U.S.A E-mail: wyl_2001_ren@126.com, carolee1989@gmail.com Abstract The Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world. In addition to being the largest bankruptcy reorganization in American history at that time, Enron undoubtedly is the biggest audit failure. It is ever the most famous company in the world, but it also is one of companies which fell down too fast. In this paper, it analysis the reason for this event in detail including the management, conflict of interest and accounting fraud. Meanwhile, it makes analysis the moral responsibility From Individuals’ Angle and Corporation’s Angle. Keywords: Enron scandal, Accounting fraud, Moral responsibility, Analysis 1. Review of Enron’s Rise and Fall Throughout the late 1990s, Enron was almost universally considered one of the country's most innovative companies -- a new-economy maverick that forsook musty, old industries with their cumbersome hard assets in favor of the freewheeling world of e-commerce. The company continued to build power plants and operate gas lines, but it became...
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...www.ccsenet.org/ijbm International Journal of Business and Management Vol. 5, No. 10; October 2010 The Case Analysis of the Scandal of Enron Yuhao Li Huntsman School of Business, Utah State University, Logan city, U.S.A E-mail: wyl_2001_ren@126.com, carolee1989@gmail.com Abstract The Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world. In addition to being the largest bankruptcy reorganization in American history at that time, Enron undoubtedly is the biggest audit failure. It is ever the most famous company in the world, but it also is one of companies which fell down too fast. In this paper, it analysis the reason for this event in detail including the management, conflict of interest and accounting fraud. Meanwhile, it makes analysis the moral responsibility From Individuals’ Angle and Corporation’s Angle. Keywords: Enron scandal, Accounting fraud, Moral responsibility, Analysis 1. Review of Enron’s Rise and Fall Throughout the late 1990s, Enron was almost universally considered one of the country's most innovative companies -- a new-economy maverick that forsook musty, old industries with their cumbersome hard assets in favor of the freewheeling world of e-commerce. The company continued to build power plants and operate gas lines, but it became...
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...Effect of unethical article ACC 291 June 27, 2013 Julio Medina The unethical behavior of Enron Corporation The unethical habits and behavior's in accounting would be deceptive under financial analysis such as gainings, misuses of fundings, overstating the value of corporate assets or underreporting the existence of liabilities, overdoing revenue as well as understanding expenses. Another unethical systems would be securities fraud, manipulation of the financial markets and bribery. Enron is one of the greatest example that impact the unethical behavior. Enron corporation was an American energy company was formed from the merger of Houston Natural Gas including the inter north a Nebraska pipeline company. Enron employed around 21,000 people and was one of the worlds leading natural gas, pulp, electricity, and communications companies. Enron reported financial situations of were the company constant of institutionalized systematic planning accounting fraud having rumors of corruption to secure contracts in central America. Enron's ethics of coding was created on respect, integrity, communication, and excellence. These values were described as follows. Respect. We treat others as we would like to be treated ourselves. We do not tolerate abusive or disrespectful treatment. Ruthlessness, callousness and arrogance don’t belong here. Integrity. We work with customers and prospects openly, honestly and sincerely. When we say we will do something, we will do it; when we say we...
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...At: http://hwsoloutions.com/?product=res-351-week-2 Visit Our website: http://hwsoloutions.com/ Product Description PRODUCT DESCRIPTION RES 351 Week 2,RES 351 Week 2,Ethics has evolved over the years, and it is necessary for any business, whether by economic or personal reasons make the right decisions, doing meticulous analysis of its ethical values. In all serious ethical experience, we have to analyze our performance towards the society. Ethics in business research establishes rules that the researchers should use as a guide. Certain rules are based on trust not entirely by the honesty of the job of the researcher, but likewise by its sincerity in the method applied to conduct the research. It is not unusual for some researchers to stutter between what is ethical or not. Business Research Article This article is about an American energy company called Enron. Enron was the owner of power plants, gas distributors and other units involved in the provision of services to consumers and businesses. This company became a major broker into the energy market, taking huge financial risks and becoming one of the healthiest organizations in the United States, with thousands of employees. In December 2001, the company went into bankruptcy leaving everyone around in shock. The commercial operations of Enron relied heavily on complex business transactions, many of them associated with future business. It is mentioned that those future business were letting to the company; money lost...
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...Review of Accounting Ethics Strayer University ACC 557: Financial Accounting Professor: Dr. Khaled Abdel Ghany July 24, 2013 Recent corporate scandals in the Unites States and elsewhere have led to a wide-ranging re-examination of standards for corporate governance with repercussions that extend also to financial regulation. Good leaders strive to create a better and more ethical organization. Restoring an ethical climate in organization is critical, as it is a key component in solving the many other organizational development and ethical behavior issues facing the organization. Unethical behavior has drawn the attention of the public for the few last decades in all kinds of business. Many transformations in the business environment have taken place, including immoral conducts and the tendency for corruption. Unethical accounting behavior is also included as a consequence. The unpredictable increase and collapse of the Enron Company set off a long-burning fire under the American social conscience. From every crevasse and corner, voices rose demanding increased accountability, demanding tighter regulation, and demanding that the unethical be brought to justice. Accounting is more and more involved in consulting, so it requires high ethical standards to built trust between clients and companies. The Sarbanes-Oxley Act of 2002 was a key milestone in ensuring the appropriate recording of financial information...
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...The fall of Enron: Corporate Culture, Governance and Ethics Written By: Bilge-Kagan Ozturk 2007 Abstract This paper examines the critical importance of an ethically based corporate/organisational culture to ensuring company-wide ethical conduct. Testament to this topic I use the case of Enron and its ethical demise to successfully support my argument and highlight the need of top level management to be the main proponents of this culture to allow lower level employees to adopt a behaviour of moral reasoning. The body of the essay will highlight the importance of shaping an ethically based organisational culture, through a number of components, namely a company’s executive management team and its corporate governance system. I also briefly evaluate agency and stakeholder theories and how they relate to an organisational culture from an ethical perspective, and point out Enron’s culture was predominantly one of agency reasoning. Finally I provide a brief and direct conclusion to assert my argument that ethics needs to exist deep within an organisation’s culture and needs to be the key leading value of an organisation. A breakdown of ethics can eventually lead to the demise of a once very reputable and successful company. A great textbook example is of course, the fall of Enron – one of the biggest corporate bankruptcies in US history. Like most companies, Enron had a code of ethics in place and employees who were educated in the field of ethics, agency and...
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...The Enron Corporation Scandal Yolanda M. Allen Business Law I/LEG 100 Strayer University Instructor: Prof. Bryan Smith 20 August 2011 The Enron Corporation Scandal Describe how Enron could have been structured differently to avoid such activities. The origins of Enron started with the merger of Kenneth Lay’s company, Houston Natural Gas with InterNorth, a Nebraska-based pipeline company in 1985. Initially, from the beginning, Enron began to show some cracks in its structure, as the company started acquiring huge amounts of debt during its foundation, and as a result of the deregulation of gas pipelines, it no longer had exclusive rights to its own pipelines (Thomas, C.B., 2002). To solve Enron’s credit and revenue problems, Kenneth Lay, CEO hired Jeffrey Skilling, who eventually became the company’s Chief Financial Officer to the CEO in 1996. Almost overnight, Skilling turned Enron into a major market middleman for energy that would dominate the trading market. After many years of seemingly huge successes, more cracks began to appear in the Enron crown. In the final analysis, the conspiracy of Lay, Skilling and others led to the collapse of the company due to fraud, false reporting of revenue, shoddy accounting practices and a general disregard for virtually every tenet of business ethics. Building a robust ethics infrastructure that is self-sustaining, by composing a sound code of conduct that supports the top level, and communicating it to all employees...
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...Prescriptive Approaches to Ethics at Enron Enron was a global energy firm that filed for bankruptcy protection in 2001. The firm’s senior managers had engaged in fraud for an extended period through a scheme in which partnerships owned by the managers could receive payment for goods and services never provided to Enron. In addition, the firm’s external auditing firm, Arthur Andersen, was complicit in the fraud by knowingly certifying false financial statements as accurate. Arthur Anderson participated in the fraud because the firm did not want to risk losing lucrative consulting contracts from Enron, which created a conflict of interest situation (Miller, 2004). The events leading to the collapse of Enron can be analyzed using the ethical frameworks suggested by consequentialist theory, deontological theory, and virtue ethics. Such an analysis can provide an explanation of the failure of Enron’s directors, mangers, and auditors to adhere to their ethical duties to the shareholders, employees, customers and suppliers of the firm. Consequentialist theory suggests that an act is ethically wrong if it results in consequences deemed wrong or harmful by the majority of people in a society (Hooker, 2002). The consequentialist theory requires assessing the actual consequences of the act, which includes both direct and indirect consequences. It also requires using some type of evaluative norm for determining whether the consequence is beneficial or harmful. The theory is prescriptive...
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