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Without protection from this sort of corporate greed, American investors would be less inclined to invest at all. One can see the effects of just the one incidence of betrayal to investor confidence and the lack of funding in the energy sector following Enron's demise, to begin to appreciate what corporate scandal based on unethical dealings could have on investment. Investment dollars is the lifeblood to the American economy. Businesses would no longer receive the vital capital needed to grow and be competitive in today's hyper-competitive, increasingly globalized economy. Investment risks would take on a whole new meaning, evolving from risks associated with the business success to risks associated with whether or not the company is accurately reporting their financial positioning. This increase in risk would be unacceptable to most investors. Society demands honesty in disclosure and will accept nothing less. For this reason, stakeholders for this situation is anyone that is affected by the American economy, from corporate executives, to gas station attendants, to the children that these people must feed and support, to foreign entities that interact with American businesses in any way, shape or form. Should this problem not have been addressed, for the greed of the few, the entire American economy, as it currently exists, could collapse.
Recommendation:
For Enron, the damage had been too severe. There...
However, in addition to this atonement, steps were taken to prevent other organizations from being able to defraud the public as Enron had. The Sarbanes-Oxley bill was made law in the summer of 2002. No longer would external auditors be allowed to be employed by the corporate management. and, not only would balance sheets and final figures be audited but also the quality of financial controls and systems that were in place would be audited as well. No longer would firms be able to both consult and audit for an organization, as this is clearly a conflict of interest. but, Enron is a perfect example of how an organization can "misuse the very standards and principles that are supposed to protect the public's interests" (Kranacher).
Although it is through these new controls that Americans hope to never experience an Enron ever again, the SEC and the American public must remain watchful for the next Enron.
References
Kranacher, M. "Financial Statement Complexity: A Breeding Ground for Fraud." CPA Journal 76(9) Sept 2006: p. 80. MasterFILE Premier. EBSCOHost. University of Phoenix, Phoenix, AZ. September 27, 2006 http://web.ebscohost.com.
On the Side of Angels." Provided - No further reference details given.
Take for instance their financing of political campaigns, which offered them access to political laws and regulations, made in their favour. However sponsorships of political parties are legal, the results Enron retrieved were immoral. Another dubious partnership was that with audit and accounting firm Arthur Andersen. The partnership was unethical but possible due to the lack of specific judiciary regulations and it was marked by numerous conflicts of interest. Altering
Training is part of this process, so that people explicitly understand the ethical culture of the company. Ethical cultures tend to be self-perpetuating because the people within the organization will hold themselves and their co-workers accountable. When you look at a company like Enron, large parts of that company were devoid of ethical standards, so it was much easier for the frauds to occur. Enron also highlights the need
Therefore, corporations have had to change their viewpoints and start looking at the long-term consequences of their behavior, as well as looking at the bottom line. Businesses also have to be concerned because consumers have also become aware of environmental concerns, and many consumers are demanding earth-friendly products and have shown a willingness to pay more money to competitors who observe environmentally-friendly practices. Interestingly enough, this demand has given rise
Priority of values should be identified so as to aid the organization avoid breaking laws by following the stipulated requirements of operation. The top three of four values should be reviewed to help the organization determine which values currently help it fulfill its mandate. For example, in the accounting department, the organization should identify accuracy and confidentiality as the key values to the success of the department. Values needed to
Ethics are "an individual's personal beliefs about whether a behavior, action, or decision is right or wrong" (Griffin, 2010). Is everyone considered a manager? Why, or why not? The traditional functions of management include planning, organizing, staffing, and directing. All of these involve certain ethical considerations which will reflect both the individual's personal beliefs as well as the belief systems of the organization. Ethics is more than a gut instinct or
From all facts and appearances, those Enron executives gave lip service to ethics, then went on their own way, making as much profit as they could while the company teetered on collapse. One final example from Enron's "Code of Ethics" is titled "Twenty-Twenty Hindsight" which carries its own irony without delving into its points. Lay writes on page 10 that if any employees' security activities or transactions "become the subject