...Impacts of Unethical Behavior Unethical behavior is among us everywhere, and in an accounting career it is somewhat one of the easiest parts of a company or organization that a person can commit fraud. It would be easy for an accountant who controls the books and write the checks to push money around, leave things off the books, and write checks to put money into their own hands. ENRON is a prime example of fraud being committed in a company. They not only caused the company to go bankrupt, but shareholders lost $74 billion, employees lost their jobs and retirement accounts were lost as well. ENRON is energy, commodities and service corporation based out of Houston, Texas. They committed many fraudulent crimes in which one was practically given to them by the government. Most organizations are regulated by the government. Financial regulation is a type of regulation or supervision that holds an organization to certain requirements, restrictions and guidelines which is aimed at maintaining the integrity of the financial system. Its’ objectives are to keep market confidence, financial stability, consumer protection and reduce financial crimes and unethical behavior. However, ENRON filed for deregulation, in which when it was granted, the executives were able to hide and not divulge certain items such as losses, which had investors wanting to invest in that company since it looked to be so profitable. However, this lead to a bigger scandal in which finance...
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...Realism is considered to be the dominant theory of International Relations because it explains the power struggle among states in the international system very well. From the realist point of view, the rule in this system is cruel, or we should say there is no rule in the operation of international relations because the only thing can be relied on is nations’ own power. Power is an important issue in realism. As Thucydides put it thousands years ago, “The strong do what they can and the weak suffer what they must”. The power they discuss here is not absolute power but relative power. It’s a concept that should be compared with other states. The interesting thing is that nothing seems to have been changed now. The international environment, in which obligation and personal emotions are set aside and the interests and survival of the states become top priorities, remains cruel as it used to be. Therefore, realists claim that pursuing power for a state is not only to fulfill its ambition but to survive. The question is why do nations need power to survive? To begin with, in realists’ definition, the state is the main actor in the international system. Though it might be city-state, empire, kingdom or tribe that represented the state at times, the point is this basic unit represents the collective will of people. (Dunne) To quest the good life of its people, the state needs power to fulfill the goal. In addition, realists believe the states operate in an anarchic system, in which...
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...of fulfilling the contract are expensed once a contract is signed (Frontain, 2002, p. 2). Enron got into trouble in 2001 when Arthur Anderson, Enron’s outside auditor, correctly accounted one partnership deal that created severe quarterly losses (Frontain, 2002, p. 2). According McLeon (2013), “Those losses and subsequent profit and debt restatements caused Enron's stock price to drop, triggering the unraveling of the partnership and resulting in a sudden and dramatic financial collapse. This event led them into bankruptcy December of 2001” (p. 1). This led to twenty-two Enron executives and partners pleading guilty or being convicted of criminal charges for their roles in Enron’s collapse (Frontain, 2002, p. 4). However, Andrew Fastow, Kenneth Lay, Jeffrey Skilling, and Richard Causey played more prominent roles in the scandal than anyone else. Andrew S. Fastow was the former chief financial officer...
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...INTERNAL AUDITING MOVIE REVIEW: Enron Movie: The Smartest Guy in the Room Tutor: Ms. Bewry March 29, 2014 Ashley Johnson-Blake ID #100426 Review Questions 1. Identify at least five (5) control issues in the movie using the Committee of Sponsoring Organization of the Treadway Commission (COSO) framework as a guide. According to COSO, the five control issues are concerned with the control environment, risk assessment, control activities, information and communication and monitoring. Based on the documentary several control issues were observed. They were: * During the Enron oil scandal aka the Valhalla scandal there was significant misappropriation of monies. In this particular situation instead of reducing risk lay encouraged traders to keep gambling more. Traders gambled away all of Enron’s reserves and this was covered up by Muckleroy who was able to bluff the market by acting quickly. * Ken Lay didn’t listen to auditors’ reports that the two rogue traders should be fired, this demonstrated one angle of lack of a good management style and monitoring. Instead lay read the report and read his budget and estimated how much the rogue executives made and if they were fired what he could lose. With all of this in mind lay did not fire the executives and had been described as a guy that puts earnings before scruples rather than reacting to the dishonesty in front of him. * Ken Lay as CEO of Enron made the statement that he is not responsible for things he didn’t...
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...Even though Mr. Peter Oiler was a outstanding employee as a truck driver for Winn-Dixie with an impeccable record had a responsibility to the company he worked for. As a driver Mr. Oiler daily task was to deal directly with the public as Winn-Dixie’s representative. He is the foreperson for the company, which everyone sees when he makes deliveries. Every company has goals and expectations as to how they want their company to be represented and how they want their customers to view them, so when a company goes through the hiring process they want employees who will represent the company and the company’s image. In the case of Oiler v. Winn-Dixie (2002), Mr. Oiler filed a case with the help of The American Civil Liberties Union to file a federal suit. They argued that Winn-Dixie violated his Civil Rights Title VII because “Mr. Oiler was not confirming to the company’s opinion as to how a man ought to look”. The court ruled that “The plaintiff was terminated because he is a man with a sexual or gender identity disorder who, in order to publicly disguise himself as a woman, wears women’s clothing shoes, underwear, breast prostheses, wigs, make-up, and nail polish, pretends to be a woman, and publicly identifies himself as a woman “Donna”. They conclude that Winn-Dixie did not violate his Civil Rights. Another case The Huffington Post (2013) reports, Olivia Sprauer was forced to resign as a high school teacher for posing in a bikini for a racy modeling photo. Even though...
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...Business Research Ethics We are going to looking at the Enron Scandal to see how this company’s unethical behavior brought it to an end, to see who were the injured parties; to see how this company’s unethical behavior affected the company and society, and to see if the unethical behavior could have been avoided or resolved? According to the New York Times (2002), in early 2000, Enron, the natural gas pipeline company turned online phenomenon, held a daylong conference in Huston for Wall Street analysts and investors. The audience, packed with financial experts on the natural gas and power industries, was wowed by all the talk of Enron’s online capabilities, especially its rapidly growing business of electronically matching buyers and sellers of numerous commodities like electricity and even network bandwidth. To keep its mystique alive and its stock price growing, it set up partnerships where it could bury its losses, or generate imaginary revenues. Here's one of the more audacious examples, pieced together by The Wall Street Journal: Enron invested a bunch of money in a joint venture with Blockbuster to rent out movies online. The deal flopped eight months later. But in the meantime Enron had secretly set up a partnership with a Canadian bank. The bank essentially lent Enron $115 million in exchange for Enron's profits from the movie venture over its first 10 years. The Blockbuster deal never made a penny, but Enron counted the Canadian loan as a nice, fat...
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...ETHICAL FAILURE: Enron Corporation Submitted by: Ishani Rawat 61 Niharika Agarwal 68 Poonam Singh 72 Ruchika Singh 77 Background Once the seventh largest company in America, Enron was formed in 1985 when InterNorth acquired Houston Natural Gas. The company branched into many non-energy-related fields over the next several years, including such areas as Internet bandwidth, risk management, and weather derivatives (a type of weather insurance for seasonal businesses). Although their core business remained in the transmission and distribution of power, their phenomenal growth was occurring through their other interests. Fortune Magazine selected Enron as "America's most innovative company" for six straight years from 1996 to 2001. Then came the investigations into their complex network of off-shore partnerships and accounting practices. What Happened? On April 17, 2001, Enron announced a 281% in revenues and a 20% increase in net income. Its stock was trading near $60. Things began to fall apart in October, however, when Enron reported an adjustment in earnings of over $1 billion in its SEC filings, resulting in a $618 million loss for the third quarter...
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...Mike Alborn 1. The leaders of Enron displayed many of the key characteristics of a charismatic leader. The display of unconventional behavior was prominent in Jeffery Skilling who transformed himself from a “nerd” to an “everyman”. He would go out mountain biking and doing other risky behavior that no other businessman would do. Other business men weren’t interested in doing activities like that but Jeffery Skilling broke the mold and showed the world he enjoyed doing these unconventional activities. All the leaders at Enron provided a strong vision especially Jeffery Skilling who brought with him many ideas when he first entered the company. He wanted to recreate the industry and wanted to trade energy more like a stock market. He brought these ideas in and everyone listened to him because all these ideas were revolutionary at the time. These leaders showed that they had personal risk because Ken Lay had always mentioned how they have a stake in everything that occurs since they all invest in the company they run. People saw how these men took risk in their own stock so they followed. Ken Lay also wanted to let everyone know that what they did was always for the stock holders and he showed sensitivity to his followers with that claim. 2. Communication was one of the big problems with Enron’s problems. There was rarely any downward communication that was real. The major leaders of Enron kept all the problems with profits to themselves and left the shareholders...
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...instructor’s name, the course title, and the date. Describe how Enron could have been structured differently to avoid such activities. Using computers, the Internet, and other resources, research the activities of the Enron Corporation (Enron), its officers, and its agents (auditors and sellers of securities). Using all the material presented thus far in the course, analyze the activities you researched. The Enron Corporation was an American energy company, which since its merger in 1985 with two other natural pipeline gas companies Houston Natural Gas and InterNorth failed to structure a corporation built around strong ethics and accordance with the law. It would be fair to predominantly commence by attributing Enron’s founder Kenneth Lay and Chief Executive Officer (CEO) Jeffrey Skilling for the foundation of Enron’s illegal depiction of it’s financial operation. At the same time under certain common laws a case arguably can be made for the senior executives or officers to established whether the Enron officers were equally responsible for their participation in the organization’s...
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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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...Plot Alex Gibney, who wrote and produced Eugene Jarecki's The Trials of Henry Kissinger, examines the rise and fall of an infamous corporate juggernaut in Enron: The Smartest Guys in the Room, which he wrote and directed. The film, based on the book by Fortune Magazine reporters Bethany McLean and Peter Elkind, opens with a reenactment of the suicide of Enron executive Cliff Baxter, then travels back in time, describing Enron chairman Kenneth Lay's humble beginnings as the son of a preacher, his ascent in the corporate world as an "apostle of deregulation," his fortuitous friendship with the Bush family, and the development of his business strategies in natural gas futures. The film points out that the culture of financial malfeasance at Enron was evident as far back as 1987, when Lay apparently encouraged the outrageous risk taking and profit skimming of two oil traders in Enron's Valhalla office because they were bringing a lot of money into the company. But it wasn't until eventual CEO Jeff Skilling arrived at Enron that the company's "aggressive accounting" philosophy truly took hold. The Smartest Guys in the Room explores the lengths to which the company went in order to appear incredibly profitable. Their win-at-all-costs strategy included suborning financial analysts with huge contracts for their firms, hiding debts by essentially having the company loan money to itself, and using California's deregulation of the electricity market to manipulate the state's energy supply...
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...Parth Vyas Econ- 312 Enron bankruptcy Enron Corporation was an American energy company based in Houston, Texas, United States. His company was formed in 1986 through the merger of two natural gas pipeline firms, Houston Natural Gas. Enron started out as a natural gas company put together by Kenneth Lay. Enron's natural gas pipeline brought the company much success. Supplying natural gas was a lucrative business. Enron senior management falsified accounting records to make it look like they made a lot more money than they actually made. Stock prices don't continue to rise unless Net Income is increasing every quarter and every year. Enron did a fraud in stocks. Enron established to shield itself from mark-to-market losses in its growing equity investment business. Enron and all publically traded companies are required to report on their finances to the public and to the Securities and Exchange Commission who regulates financial reporting over publically traded companies. The problem for Enron was that after some successes the traders began to have some financial failures and Enron was no longer really making a profit. The market traders, who were effectively just high-stakes gamblers, were no source of profits but instead a major source of loss themselves. People formerly involved with the company, such as creditors, auditors, the SEC and accounting regulators, it’s a nightmare for them. Enron essentially failed because the executives did not want to admit defeat. They had...
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...ENRON'S MANY STRANDS: A CASE STUDY; A Video Study Of Enron Offers A Picture of Life Before the Fall By SHAILA K. DEWAN Published: January 31, 2002 Correction Appended SIGN IN TO E-MAIL PRINT SINGLE-PAGE In April 2000, Enron was still flying high, at least publicly. Jeffrey K. Skilling, the president and chief operating officer at the time, faced a video camera and spoke enthusiastically about the corporate culture that would, he insisted, enable Enron to go from the world's largest energy-trading company to the world's leading company, period. ''People have an obligation to dissent in this company,'' Mr. Skilling said, detailing Enron's core values of respect, communication, excellence and integrity as company posters of a sunflower and a smiling baby girl flashed on the screen of what became a multimedia computer presentation. ''I mean, I sit up here on the 50th floor, in the library. I have no idea what's going on down there, so if you've got a problem with it, speak up. And if you don't speak up, that's not good.'' The video was part of what was supposed to be and, for a few months, was a case study of a phenomenal transformation, prepared by two University of Virginia business professors with exclusive access to Enron's top executives. But what was meant to inspire students has become a cautionary tale, a study in hubris all the more valuable for its intimate picture of life before the fall. ADS BY GOOGLE MBA without Bachelor British Online MBA for...
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...Processes MGT615 AIU Processes Processes MGT615 AIU September 27, 2015 Abstract After encouragement to write a brief article about "CEOs and presidents" for a management journal by a colleague, this paper will compare the leadership styles of three leaders: Ursula Burns, Rodney O’Neal, and Kenneth Chenault will be compared. It will include an introduction to the concept of influence processes, a summary of the various types of influence processes and the factors that can affect them, and an analysis of the processes used by the three leaders. Influence Processes Influence processes are the processes a leader will use to influence their employees. There are four types of influence processes which are high-control innovator, status quo guardian, participative innovator, and process manager. There are six factors that could affect these influence processes, which are environment, structure, leadership, technology, strategy, and culture (Nahavandi, 2006). Ursula Burns, Rodney O’Neal, and Kenneth Chenault are three leaders with different leadership skills. The influence processes leaders use to impact their organization are direct decisions, allocation of resources, reward systems, selection of other leaders, promotions, and role modeling. The direct decisions that a leader will deal with include various aspects of the organization’s shape, vision, mission, and culture. The allocation of resources is one of the most powerful effects of top managers; a leader has...
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...Enron Corporation’s rise involved detrimental decisions that originated from the very beginning of the company and every step there on. These crippling actions hindered the life of this enormous company: • Improper utilization of cash and lack of clarity about the company’s identity which led to the funding of failed ventures • Large payout bonuses, luxuries, management loans • Lack of harmony between management across different divisions and employees • Minimum seasoned professionals with expertise in evaluating risky situations • Utilization of only extrinsic motivation to obtain results and enhance performance • ST results focused and improper growth strategies Not all the actions taken by Enron were bad. I agree that for the success of a company they must bring in the best and brightest people. Extrinsic motivation does bring in results. With this Skilling provided an open environment allowing out of the box thinking. This loose culture increased performance, which led to taking risks resulting in innovation. Enron was originally known as a natural gas company and began to attempt to diversify its revenue stream by implementing power trading, broadband and other market-making activities. Decisions made by Enron promoted the “grow fast” strategy as they began to make acquisitions that provided a backbone to their growth strategy. Many of the strategies developed were great such as creating markets where markets never existed. With the many ideas formulated,...
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