Essays on Enron

In the year 2001, the Enron Corporation, an American energy company, went bankruptcy due to lack of proper and misguided information. This contributed to the firm failure and largest bankruptcy recognized in American history by the year 2002. This affected stock market and hence stakeholders and employees received limited returns. The Stuart Mill’s theory of Utilitarianism explains the doctrine of having right actions if they are meant and useful and benefit the majority (Sellars, 2016). I believe Mill’s theory and philosophy. Regarding the Enron 2002 scandal, the theory relates to the actions taken by the management of ...

1) The word "corrupt" refers to a person’s act(s) of being dishonest and engaging in practices such as lack of integrity, crookedness, and bribery ("Definition of CORRUPT", 2016). It also refers to the destruction of integrity thus causing an individual to be dishonest and disloyal. In the case of Arthur Anderson, the prosecution noted that the accounting firm dishonestly encouraged Enron employees to exercise routine destruction of documents knowing that the government’s investigations into the acts of the accounting firm were imminent. The deliberate intention of the destruction and hence wrongdoing of Anderson was meant to ...

Introduction

According to Trevino & Nelson (2011, p. 35), fraud does not happen as a coincidence. To be specific, fraud in organizations is usually premeditated and has to happen in the right conditions and members of the organization in authority often set these conditions. As such, identifying the root causes of fraud, which is called fraud deterrence, should be one of the priorities of corporate governance. Since fraud has been a common menace in the history of organizational management, various strategies, government regulations, and acts have been developed to prevent the occurrence of fraud (Giroux, 2013, p. 32). These procedures cover ...

Background

Enron case study dwells upon one of the most known scandals in business ethics and financial world. Founded in 1985 as a result of the merger between Houston Natural Gas and Internorth, Enron Corporation starts trading natural gas commodities in 1989. Throughout the 90s,the company was considered one of the most innovative and attractive for investment companies in the country. Renown for its unique business model and trading businesses, the company benefitted from a positive image, shareholder trust and external financing (Li, 2010). With a number of changes in leadership from Jeffrey Skilling to Kenneth Lay, who occupied ...

Charismatic leadership in relation to Weber’s theory is the perception of the sub-ordinates that a leader has an attractively inspired gift, which will change their lives extraordinary (Sendjaya, 2015). It is based on the characteristics of the leaders like passion, confidence, and high level ability to influence people. However, these abilities of the leaders sometimes contribute to dysfunctional attitudes, such as high level egoism and self-centralism (Van Wart, 2014). In other words, a leader can be positive charismatic leader or negative charismatic leader. The leader with positive charismatic leadership abilities is oriented to others, whereas the leader with ...

Abstract

The given case study discusses the rise and fall of Nortel Networks Corporation, which was one of the world’s largest telecommunication corporation. Nortel was a Canadian global organization that was at its peak in the early 2000s and apparently, it botched due to inefficient echelon management, inflated earnings and costs, dysfunctional directors’ board, as well as, illusion of constancy and stability. Although there were numerous possibilities that could have been adopted to prevent the fall and demise of the company; however, those roads were unfortunately not traveled. Nortel’s downfall began when it fails to live up to ...

Business Ethics Capstone Project

Introduction Business and ethics are really important in all aspects of life. There is the need for every human being to follow rules and this includes generally accepted morals as well as laws. In most cases, laws seem to evolve from morals and generally accepted customs and practices. However, laws come with specific sanctions whilst morals often come with softer consequences like reputational issues. There are many situations where organizations set up ethics as a means of ensuring that the workers observe moral standards in order to reduce the risks of legal problems and issues in its operations. Ethical ...

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Introduction

The failure of Enron due to unethical practices had served as a lesson for the entire world. Firstly, it was first of its kind and secondly, there was a chain reaction of wrong actions to cover up smaller misdoings. Every field of study tried to find out the real reasons of failure of Enron as a corporate. Some claimed it to be financial failure, some as leadership failure, some as cultural failure and some as corporate governance failure. This case is one of the basics to understand corporate social responsibility and implications of failure to ...

Market Research Report for Tesla

Executive Summary Tesla is currently considered as one of the global leaders when it comes to innovations and the production of electronic vehicles. Some of its famed products include the Tesla Roadster, Model S, Model X, and Model 3. The company under the leadership of Elon Husk, the CEO, ventures into external markets with the aim of maximizing profits. China has been one of the target markets that Tesla has already explored and now aims at ensuring that the company gains a competitive advantage over the existing electronic vehicle companies. This is after China was predicted to offer the ...

GAAP and Consolidation

The Generally Accepted Accounting Principles (GAAP) that are used in the United States issue very specific instructions on how companies should consolidate their financial reports when a merger or acquisition is accomplished. These instructions came as a result of the Enron scandal during the early 2000s, as the energy company shifted deadweight losses to subsidiary companies owned by executive staff to make its balance sheet look as profitable as possible. The losses were therefore hidden from public view, and contributed towards the impending financial collapse of the company. Because Enron led by example, the Financial Accounting Stability Board (FASB) ...

Investor Communication Plan

Investor Communication Plan

Background

Western States Electric Components Group, a subsidiary of Consolidated Electrical Company, mistakenly misrepresented its sales income for the past four years. Western has been selling about 55% of its connolator generators to various ConsoE’s divisions at lower internal retail prices. The different divisions resold these connolators acquired from Western to outside companies. Unfortunately, the financial department has been recording these activities as two separate earnings, hence double booking. Upon the revision of the accounts for the four years, profits for the following financial year will come out as big loses hence affecting the prices and ...

Introduction

The CFOs have a lot to deal with as their strategic responsibility in business continues to grow and become more complex. Owing to their extensive duties, the cash compensation of the financial officers continues to increase with each passing year so much that the officials are starting to bridge the gap between CEOs and them. The financial market appears to be more inclined towards a skill-driven workforce as compared to the traditional approach of leadership provided by the CEOs. This essay attempts to develop an understanding concerning the issue of the rising salary of CFOs by using three primary ...

I. Good Samaritan A good Samaritan, named after the biblical parable, refer to a person that voluntarily and with no expectation of reward or thankfulness provides help and assistance to a person in need. In criminal justice this is often exhibited in a person who helps a victim. For example: In 2014, Angela Radtke was first arrested then released for breaking into a car when police learned that did so to save a baby that had been locked in to car during a day of high temperatures. In 2013, Charles Ramsey helped three women missing for years escape from ...

Post Crisis Change Management in Business Organizations

Business Organizations are often confronted by situations which induce their owners to re- examine their policies and processes. These situations are termed as crisis and needs reformulation of organizational processes, in absence of which the existence of the organization may be threatened. These situations may erupt from failure to anticipate the internal and external consequences from economic, political, ethical and technological changes related to organizational activities. Even if they are anticipated, crisis may not be altogether averted; only it helps in formulating contingency plans that are used to address post crisis situation and calls for initiating changes in the ...

Virtue Ethics

The essence of Virtue Ethics is based in its antiquity and the fact that almost all ancient civilizations having endorsed some form of this principle. This is one form of Ethics that can directly be applied to professional and managerial situations. The reason for this is the ‘character-based’ nature of Virtue Ethics, wherein one evaluates an action in terms of specific ethical goals. In a sense, Virtue Ethics answers questions for managers better as compared to the Teleological or Deontological Ethical thoughts that are more consequence or duty based respectively. This essay would proceed to describe Virtue Ethics and ...

The biggest scandal of the early 21 th century was that of "Enron". The financial collapse of US energy giant happened with the participation of offshore companies. In the 90s the company began to trade, not only gas but also electricity. The Corporation has entered the stock market, which allowed it to have room for financial maneuvering. "Enron" was the largest trader in the electricity market in 2001 and reached TOP-10 in the "Fortune 500" list. Naturally, there were close links with major policies - it is the "Enron" has become a sponsor of the longwall-George W. Bush in ...

Abstract

The Sarbanes-Oxley Act changed the ethical nature of accounting for publicly traded companies. The Act requires new forms of ethical behavior from companies, such as creating and maintaining a code of conduct that all employees, even executives, must follow. It also requires that they honestly and accurately report financial reports and maintains that the executive officers of a company have the most responsibility in reporting and certifying that the information is correct. The Act also changes the auditor-client relationship by making auditing more independent of the client, establishing an auditing committee overseen by the SEC, and ensuring transparency. The ...

Abstract

The paper will explore the business environment and the fraud scandals that prompted the need for more comprehensive and stringent regulations on financial disclosure by all public business entities operating on U.S. soil. The primary financial issues that the Sarbanes-Oxley Act was meant to address will be addressed, with a specific focus on how to restore investor confidence by imposing more strict rules on companies in terms of recording investments, cash flows and periodic profit/loss statements . Through an analysis of the basic provisions of the Act with regards to assigning personal responsibilities on officers of the company, as well ...

Introduction

Throughout this discussion, we will analyze the history of life insurance companies, any major events which impacted the life insurance industry, including the Great Recession of 2007 which lasted for two years, rules or regulations proposed by Congress that govern the present operation of life insurance companies, including any changes of insurance laws, the current Presidential candidates plan on implementing for the life insurance industry and future expectations of the operational life insurance environment.

History

The life insurance industry began in the ancient city of Rome around 100 B.C. The Roman militant leader named Caius Marius, had created a certain ...

In any organization, sometimes things take a new wrong turn and fall apart. The moment issues assume this direction that is when it is said that the culture of integrating professional ethics in the workplace or any other group with a leader has failed to be upheld. While under the management of Dell Company, this is the case that was experienced the time the group's leader decided to use his individualistic decision-making process rather than collectivism. Since he (the manager) failed to apply ethics in his decisions, the business failed just the same way he failed to address the ...

Alexander (2007) tells us that duty ethics, or deontology, is a normative theory regarding what people should do, rather than what they should be. Hence, duty ethics is chiefly concerned with actions people take, rather than the consequences stemming from those actions. Deontology, in broad strokes, posits that if an action is right in principle, then there is no moral obligation forbidding that action – it need not be avoided, regardless of consequences. Deontological theories are best understood in contrast to their consequentialist counterparts (Alexander, 2007). Consequentialism dictates that actions or intentions ought to be judged by the state of ...

The paper highlights the scandal of Enron and three prominent issues of Enron which led to the collapse of Enron. Enron was energy, commodities, and services company based in Houston, America. After reaching an incredible height of success, Enron Corporation collapsed because of bankruptcy. The policies implemented by Enron backfired and proved to be fatal for the company,as the company crumbled down. The deregulation of Enron was one of the reasons for its doomed fate since Enron was involved in maintaining agency’s earnings reports for investors. Enron did the reporting in a vague manner, hence hiding the ...

Corporate social responsibility has in the previous years worked its path into many corporate agendas and policy debates. Its definition has also undergone multiple modifications and is currently evolving along with the societal expectations (Crowther & Aras, 2008). Despite there being no single definition that is globally accepted, several events can be singled out as not fitting the framework of corporate social responsibility. The surprising collapse of Enron Corporation compromised the safety of over 20,000 employees’ pension funds (Silverstein, 2013). The corporation operated as if it was an isolated entity that had no links with the wider society. Due ...

Introduction To Graduate Studies

Introduction To Graduate Studies

Part A

1a. Raj, R. (2009). A study in business ethics. Mumbai. Himalaya Publishing House. Retrieved from http://site.ebrary.com

1b. Relationship between ethics & corporate excellence

1c. Inspite of Indian having an ancient culture and philosophy about worklife, we in India have not yet managed to develop our own management styles in consonance with our own cultural ethos and have been systematically importing management systems and styles from foreign countries. Raj (2009) states: Inspite of Indian having an ancient culture and philosophy about worklife, we in India have not yet managed to develop our own management styles in consonance with our own cultural ethos and ...

Introduction

Corporate executives are required to maximize shareholder revenue while avoiding agent-principal conflicts, enhancing the reputation of the companies, and conforming to the regulatory standards. The situation in Enron indicates the corporate irresponsibility and managerial negligence that resulted in investor outrage and multiple lawsuits. The shareholders demanded legislation reforms, managerial accountability, and corporate power. The scandal in Enron encircled unethical and illegal activities punishable by law. This essay attempts to evaluate the virtue ethics that apply to the case of Enron.

Body

When it comes to the concept of virtue ethics, the postulates shift from individual, agent-centered, and action-oriented. The theory ...

How to Reform Corporate Ethics in American Business Today

Corporate ethics is an important sphere of American business the regulation of which is of utter importance. It comprises the rules how the company operates: its management, control and responsibility for improper actions. The regulations of corporate governance and implementation of effective corporate ethical standards affect the situation of the economy of the state. Inefficient regulations may lead to huge problems, such as the Great Depression of 1933, ENRON case of 2007, global financial crisis of 2008, because of which the whole world economy was negatively affected, a lot of investors were defrauded, money stolen and etc. Scholars believed ...

High-risk investments mean volatility associated with the returns on investments and stock prices change. Any investment transaction has a risk element. Moreover, the major proportion of the investment theory states that the potential profitability is inversely proportional to the risk level . At this, it is not important whether it goes about the passive investment, active stock transactions or new business projects. Risk allows earning much and provokes losing much because associated with potential losses even in the case of success. It is extremely important to understand quantitative and qualitative characteristics of risks, which affect the amount of the invested ...

The fall of Enron

What went wrong and why? Answer. The wrong done in the case of Enron and the reason for the wrong can be described on the basis of the following aspects of their business: Enron’s core business was initially focused on natural gas pipeline and they made exceptional growth in the business. By the end of the 1990s they decided to diversify their business to the newly emerging business of asset management, construction, and Internet operations. Enron entered into foreign markets of Latin America, Asia, and UK with fresh subsidiaries focusing on development of asset management, construction, and internet ...

Enron did not focus on actually supplying oil and gas, like a traditional company would. Instead, Enron oriented their efforts towards buying futures (investments predicting the future price of a commodity) in oil. The company also bought electricity from generators and sold it to consumers. One of the bold moves that the Company carried out was the signing of marketing agreement for a year, which was the first in the industry, with Calpine Corporation. According to the agreement, the natural gas daily prices would be linked with the electricity prices. Another example would be the signing of contract for ...

The aim of the project is the implementation of ethical influence concepts of a practical example. For this purpose, Enron has been discussed in the current assignment. The company faced bankruptcy in 2001 because of the unethical behavior and negative politics of its leadership. The top leadership of the company abused its power and manipulated the information.

Why did it happen?

Enron is a big example of unethical utilization of power, misbehaviors, moral failure, and unethical executive practices. All these mistakes of Enron led the company towards bankruptcy. There are five ways; power comes from that include coercive power, reward power, legitimate power, ...

The 1920s was known as the Roaring Twenties in the American history because of changes in the social norms, and the country experienced a strong economic boom (Kennedy: 2). During the time of widespread economic gain, the application of fair value in accounting and lack of regulation in security markets left the investors at great risk. That is the reported figures of stock prices had no information justifying their values. Similarly, financial institutions such as banks were lending recklessly with no guarantees to their clients. Consequently, the gap between the rich and the poor in America increased steadily (pbs.org). ...

Agency Problems

1. The agency theory is a supposition that tries to develop an explanation for the relationship that exists between principals and agents in a business (Pfeffer and Salancik, 2003). Normally, agency theory involves developing solutions to the problems that might exist in agency relationships, such as problems between the principals and agents of the principals. One aspect of agency theory is separation ownership. The relationship developed between the owners of the company (shareholders) and the agent (directors) in a company creates a separation in the ownership and control of the company. Major companies such as the ones listed in ...

In the case study, it is pointed out that all through the late 1990s, Enron Corporation was nearly universally regarded as being among the country’s most innovative corporations (Li 37). The company went on building power plants and operating gas lines; however, it turned out to be well known for its exceptional trading business. Apart from buying, as well as selling, electricity and gas futures, it engaged in the creation of entirely fresh markets for such eccentric ‘products’ “as broadcast time for advertisers, weather futures, and internet bandwidth” (Li 37). Enron Corporation was established in 1985, and being ...

Introduction

Since the landmark case of Enron Corporation controversy in 2001 involving the company’s bankruptcy, the public’s view of structured finance and derivatives has been tainted with suspicion of unethical exploitation. Although the legalities involving the abuse of structured finance by market participants for economic gains is still being explored, recommendations are necessary in order to minimize the impact of a market meltdown.

Defining Structured Finance and Derivatives

The term structured finance is rarely defined, but to give an example, a structured financial transaction often uses an SPE or a special purposes entity. A larger corporation uses an SPE as a subsidiary in ...

Introduction

Mark to market, also called fair value accounting, has been one of the most controversial accounting methodologies in financial reporting. Mark to market refers to an accounting process in which the reporting entities report the value of assets and liabilities as per the current market value as opposed to the book price thus making the methodology highly subjective (Association of American Bankers, 2016: Serakibi, n.d.). Therefore, since the reported value is pegged on the prevailing market value, it follows that the value of the financial statement would change as the market changes. In most cases, the change in value ...

Company and Situation

In the period following the late 1990s, Thomas (2002) mentions that Enron Company was regarded as one of the outstanding, as well as, most innovative companies in the American state. The entity continued with its bid of building new power plants and operating other gas lines. It was also well-known for its unique methods of trading. However, all these prospects came tumbling down when it admitted to having misrepresented its incomes and that the company’s value of equity was less than the one stated in the balance sheet. In this light, the following paper will conduct research regarding ...

The Enron bankruptcy scandal is a great example of the Mishkin’s concerns about asymmetric information problems. The key reason of the Enron scandal was that the management knew about huge financial losses of the company, but with help of various loopholes in accounting and poor financial reporting, top managers succeeded in hiding billions of dollars of financial losses and failed projects. This has created a situation characterized by the availability of asymmetric information, described by Frederic S. Mishkin in all the details. Enron was one of the largest and known audit companies in the world, and other top ...

Enron Corporation an American energy company was based in Houston, Texas before its decline in 2001. In the company, over twenty thousand employees were contracted in this organization. More particular, Civil Engineer were contracted in the field of Natural gas and other field operations, professionalism of these employees was in doubt that they led to bankruptcy of the whole company. The financial condition of the company was sustained through an institutionalized creatively planned financial fraud referred as the Enron Scandal. The corporation has since been a famous example of a willful corporate and corruption (Rapoport, 2004). In modern world, ...

Ethics and Governance

The concepts of ethics and corporate governance are unceasingly becoming importance in the modern day organizations as they play a great role in addressing key issues. In that respect, the two concepts take varying approaches and their application varies among firms (Elms et al., 2010). Regarding the ethics issue, it relates to the norms and morality of a given community and what is right or wrong draws from those norms and morality values. In the modern world, the issues of ethics have been popularized given the increased cases of organizations that have been judged on the ethical basis (Cannon, ...

Theft of trade secrets has emerged as one of the easier crimes for disgruntled, unethical, or unscrupulous and opportunistic employees to commit. These employees may which to harm their employer or wish to achieve some personal gain by selling or trading the trade secrets that they can obtain through the course of their trusted access to company systems. These thefts are most often committed by individuals who are looking for alternative employment for those who are looking to start their companies, all on the backs of the good work of their current and soon-to-be-former employer. These thefts can be ...

Internal proposal for solar and nuclear energy

The purpose of this internal proposal is to propose the use of solar and nuclear energy as the main sources of energy to generate electricity to solve the current energy problems that face individual households, industries, and organizations across the globe.

Summary

The current energy crisis existing across the world is pushing countries to come up with effective sources of energy that are cost effective and friendly to the environment. Energy shortage and blackouts cause a lot of financial problems to people and industries. These energy shortages are as a result of economic, environmental and social problems. The decrease in ...

Introduction

In his case, Ferrell (2012) discusses Enron Corporation from when it was formed, when it collapsed and all that followed after its collapse. Enron Corporation is an American company headquartered in Houston, Texas. This company was formed in the year 1985 through the merging of two gas pipeline companies. Enron Corporation deals in products and services such as natural gas, and also electric power generation and distribution. However, in the year 2001 when Ken Lay was the Chief executive officer and at his time of his stepping down, Enron was faced with financial problems which eventually led to its ...

Question 1. How do morality, ethics, and leadership play a role in shaping good and bad business?

Answer. With Enron and other similar scandals flummoxing the corporate world even now, the significance of morality, ethics, and sincere leadership automatically comes to the fore. There is no debating around putting the business into ethics or putting ethics into the business. Literature endorses that sustainable and fruitful business enterprises share values with the societies they operate in. The absence of this trait may put them under legal scanner or render them insignificant in the eyes of stakeholders. Statistically speaking, 59 percent of respondents, in a survey conducted in 2006, rated their school programs as good for integrating ethics ...

Accounting refers to the activities of recording, summarizing, maintaining and publishing financial statements for public, etc. These activities play a vital role not only for internal users of the information but also for the external users who might raise issues and concerns to the work being carried out. It is essential for the investors to get the correct picture of the business before taking the risk of investing in the venture. The ethical practice also enhances the performances and procedures of the organization. Ethics relate to segregating what is good or bad for the consideration of the moral duties ...

Business Ethics

The current article on ethics is ‘Enron, Ethics and Today's Corporate Values’ which is available on the Forbes website. The main points of the article are the segregation of duties, implementation of ethical rules in detail, balance between the desires of stakeholders and the ethical demands and the importance of ethical practice to enhance the strength of the business. (Silverstein, 2013) The current article is very important for the understanding of the ethics because it is about the Enron’s ethical issues, which is the most important case study relevant to the ethical issues. In the bankruptcy of the ...

Various scandals across Europe have forced regulators to tighten rules that govern the appointment of external auditors and the auditing process. The Enron scandal, scandals at WorldCom and Global Crossing and the collapse of Arthur Anderson provided a platform for tightening of rules governing auditing process to avoid reoccurrence of the events (Cray and Lee 305). In UK occurrence of many scandals initiated formation of corporate government framework. Among the scandals witnessed in the United Kingdom include names such as Polly Peck, Robert Maxwell, and BCCI. To protect companies from the occurrence of scandals that may result in their ...

Introduction

There have been cases of corporate scandals in the recent past including the Enron, Tyco, WorldCom, and Global Crossing to name a few. These scandals fueled concerns regarding the financial reporting standards not only in the USA but also in economies where the financial markets tumbled as a consequence of the news of such scandals becoming public. These scandals arose because of weaknesses in internal controls and lack of independence by external auditors. For instance in the Enron, case, the external audit firm known as Arthur Andersen was criticized for lack of independence both in fact and appearance. The ...

Abstract

The paper details the implication of violation of ethical decision making and professionalism citing the example of Enron Scandal. Enron, which was once rated as one of the most innovative companies by Fortune Magainze, is now largely known for the accounting scandal that eroded $78 billion from the stock market and affected thousands of company’s employees, just because of malfeasance activities by the company’s executives, who hide billion dollar losses and debt owned by the company to inflate the stock price and meet Wall Street’s expectations while in reality it was in massive losses.

About the paper

Anyone who ...

According to the film, "Enron: the Smartest Guys in the Room," weaknesses in the capitalistic system are exhibited such as the cultures that have been created that involves practices of fraud and greed. These practices are fostered by the fact that the economic system is vulnerable to abuse by anyone who could manipulate the stockholders as well as the public. For instance, the management of Enron was able to augment their share price by convincing the public that it was making sufficient money without providing any prove. Another weakness is the ignorance of the regulators to ensure that the ...

Background Information of Enron

Enron’s history as an entire corporate entity begins in 1985 when Kenneth Lay arranged a formation of Enron by means of combining Internorth and Houston Natural Gas (NPR, 2002). Internorth and Houston Natural Gas operated as “natural gas pipeline companies”, therefore, Enron obtained ownership of and control over thousands miles of gas delivery pipelines connecting producers to customers via intermediary firms (Healy & Palepu, 2003, pp. 4-5). Hence, Enron was first engaged in buying natural gas from drilling companies and reselling it to intermediary companies which, in turn, sold it to final users (p. 5). In furtherance, Enron’s ...

Arthur Andersen founded Arthur Andersen LLP (AA) in 1913. AA was built upon legendary integrity. On one occasion, Arthur refused to approve a transaction that could have inflated the earnings of a local railroad company. In 1954, AA started offering consultancy services that soon overtook audit services as the main revenue source. The culture of AA started changing from one where integrity and reputation came first, and instead AA focused on an aggressive pursuit of revenues. As the pressure for profits mounted, AA adopted more rationalized Audit approaches that required more analysis and less time input. AA started having ...

The Milgram Experiments were basically a series of psychological experiments conducted by a psychologist professor from Yale University named Stanley Milgram; the purpose of the said series of experiments was to describe and measure the willingness of individuals to obey the orders of a person of authority and participate in a conspiracy or any scheme that conflict or go against their personal conscience. The reality is that these series of experiments had a long development period. It was first published and discussed in a 1963 edition of the Journal of Abnormal and Social Psychology. Milgram then went on to ...

The FASB123 and the FASB123R are basically similar policies or standards that account for a company’s stock options offering and compensation procedures. In technical terms, however, they are different because the latter is an updated and revised form of the former. Prior to the existence of the FASB123, company employees (from the Chief Executive Officer down to the rank and file employees for some publicly listed companies) receive equity-related compensations such as the ability and right to purchase stocks of the company for a discounted price (i.e. stock rights) and benefits aside from their basic salaries. The problem ...

The case before the Supreme Court brought a lot of conflicting opinions and divergence of opinion as many people consider the contentious issues presented in the case matter of public importance that needed to be sought with constitutionality and clarity it deserves. There has been precedence about constituting of public boards and the question of presidential powers and control as enshrined in the constitution, which remains the highest weapon of justice in the US. As witnessed in the case, there were no outright decisions from the arguments presented in the case. The topic of public audit and control over ...

Duty ethics or deontology is concerned with the actions of people, not the outcomes. It is the normative ethics that judges the morality of actions based on their adherence to a specific rule or a set of rules. In the terms of business, it means that employees justify their behavior by honoring organizational policies and procedures. There are four primary duty theories. The first is avered by Samuel Pufendorf in a bygone era of 17th century. He categorized dozens of duties into three subsections as duties towards God, self, and others. He further pigeonholed "duties towards others" into two ...

Learning Activity 1

The basic assumptions that an organizations holds forms the basis of an organization's culture. These assumptions can be deeply enmeshed in the culture of an organization so much so that they may even go unnoticed. Yet, at the same time, the basic assumptions are in fact the essence of what makes up a culture. But basic assumptions are the essence of culture. As such, they are the real truths of organization's lived principles. Assumptions are the line which squares itself against espoused values and artifacts. An example of an assumption held in a working call center in a large ...

Impact of PCAOB on auditing profession and fraud prevention

US accounting profession was blotted with the whirlwinds of corporate scandals like Enron and Worldcom during 2002. Investors lost billions of dollars as they were duped by these companies through accounting fabrication, which deceptively showed the shallow side of the companies to the whole investment community. Accordingly, the financial markets were suffering from the tapered investor confidence and it was important for the US government to restore that confidence by bringing in some strict legislations for the corporate community, and this lead to the passing of landmark legislation, Sarbanes-Oxley Act in 2002 and one of the most important aspect ...

Enron was the sixth world largest energy corporation. It claimed a lot of annual revenues and a sizeable workforce and became the biggest company in America representing a new business breed. The story of Enron’s company gives insight into the corrupt business, a culture that is faced by unethical practices. When talking of Enron, one undoubtedly thinks of its ensuing scandal and collapse. The downfall of the company was as a result of several wrong decisions and accounting practices at almost every level of management. The film shows how top leaders such as the chairman and founder Kenneth ...

Question I – Explain the strategic management process and how a corporation is likely to use this process to achieve strategic competitiveness to earn above average returns. Strategic management is the counterpart of the scientific problem process in the field of science. It grossly involves the identification of a problem, the gathering of information, and formulation of a hypothesis and a solution, and it usually ends with implementation and evaluation. The typical problem solving process shares a lot of similarities with the strategic management process yet the two cannot be the same. In general, the strategic management process involves four ...

Powers Report: The Enron scandal

The Enron scandal that occurred in 2001 has been cited as the biggest audit failure. The scandal would later lead to the bankruptcy and collapse of Enron Corporation. Enron was an American energy company that was based in Houston. It was the largest energy company in the United States. The scandal also led to the dissolution of Arthur Andersen, an accounting firm that was one among the largest five accounting firms in the world. The investigation began when the share price of the company declined sharply from $ 90.75 in the mid of 2000 to less than $1 in 2001 ( ...