The Enron Corporation was declared insolvent in the year 2002 while Arthur Andersen failed a year later. Various scholars have scrutinized these incidents with the intention of identifying its cause (Cruver, 2003). A strong observation highlights that the failure and the possible recap relates to the decisions adopted by the teams. Particularly, reliable sources account that insensitivity of ethical obligation in the decisions adopted by the teams led to the incidents (Lublin, 2002).
The two teams overlooked essential ethical principles when making decisions regarding their undertakings. Initially, most decisions adopted by the two companies were insensitive to the idea of neutrality because they often engaged in unfair activities. Lack of impartiality in decisions earned the companies a series of litigation that contributed to their failure (Hiltzik, 2002). Furthermore, ethical standards emphasize the need storing files used for sensitive activities for future reference. However, studies indicate that Andersen ignored this idea because most of the business’s transactions were never archived. Indeed, the gravest mistake that led to the eventual demise was deleting the emails and the agreements made with other parties, including Enron (Cruver, 2003).
The effect of bounded ethicality is apparent in Enron’s financial management procedures. It is clear that auditing discrepancies led to the final demise of the Enron Corporation. Anderson identified numerous malpractices that included the use of fake documents to certify financial transactions. However, the company had to try its best to hide the situation to the public in order to protect its profile. When the issue linked to the publicly, Enron faced a risk of seizure and the license for the firm was seized by CPA (Lublin, 2002). This case highlights the role of bounded ethically aspects in shaping decisions adopted by the two teams.
References
Cruver, B. (2003). Anatomy of greed: The unshredded truth from inside Enron. New York: Carroll & Graf
Hiltzik, M., A. (2002). "Enron's Web of Complex Hedges, Bets; Finances: Massive trading of derivatives may have clouded the firm's books, experts say." Los Angeles Times. Retrieved from http://www.financialpolicy.org/dscquotes2002.htm
Lublin, J., S. (2002). "Enron Audit Panel Is Scrutinized For Its Cozy Ties With the Firm". The Wall Street Journal, Retrieved from http://bodurtha.georgetown.edu/enron/Enron%20Audit%20Panel%20Is%20Scrutinized%20For%20Its%20Cozy%20Ties%20With%20the%20Firm.htm
