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Corporate Social Responsibility, Ethics, And Business Law:
The Fall of Enron and the Discussion of Morals in Business
Ethics in business has continued to be a growing concern in the twenty-first century. In order to protect and attract stakeholders, companies have enforced social responsibility, while law has protected and ensured security to stakeholders through the passing of laws. Despite corporate social responsibility and federal law, individuals in some businesses still find means to sacrifice their morals and company reputation for their greed or disparity.
Enron Corporation was an energy company that was founded in Omaha, Nebraska in 1985. By 2000, Enron was able to claim revenues of roughly $101 billion and be a leading competitor worldwide in their industry. The year of 2001 saw a different reputation for Enron. It was publicly announced that lead accountant Arthur Andersen and other prominent staff had been embezzling and falsifying financial documents. "America's Most Innovative Company" quickly found itself as a symbol of American greed, corruption, and fraud. Stakeholders, some retired, suffered the financial consequences...
Compliance with the SOX Act is required by federal law for large and small businesses alike. Arranged into eleven titles, SOX states that businesses must implement corporate responsibility to financial statements, publish accurate financial statements, practice and assess internal controls, and disclose information about changes in financial conditions to the public. Section 802 of the act clearly discusses corporate fraud and accountability and the punishment if committing fraud (SoxLaw.com, 2006). Along with SOX, American companies must also comply with the Generally Accepted Accounting Principles (GAAP). Overseen by the Federal Accounting Standards Advisory Board, GAAP is officially established and updated regularly as it sees fit, such as with the fall of Enron. In order to avoid leeway in falsification, misrepresentation, or fraud, GAAP prohibits accountants and auditors from expressing personal opinions about the financial state of a company (FASAB, n.d.).
Social responsibility is the belief that an entity has an…
References
Ackman, D. (2002, January 15). Enron the incredible. Retrieved April 21, 2011 from http://www.forbes.com/2002/01/15/0115enron.html
FASAB. (n.d.). Generally accepted accounting principles. Retrieved April 21, 2011 from http://www.fasab.gov/accepted.html
Friedman, M. (1970, September 13). The social responsibility of business is to increase its profits. Retrieved April 21, 2011 from http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html
SoxLaw.com. (2006). The sarbanes-oxley act of 2002. Retrieved April 21, 2011 from http://www.soxlaw.com/index.htm
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