One situation that may lead to unethical practices and behavior in accounting is a toxic corporate culture. Simply put a corporate culture defines the way we do things here. Some of the most important factors shaping a corporate culture are the behavior of leaders and the leadership style prominent in the company. If ethics and integrity are not actively practiced and not just words on a Code of Ethics, the company is very prone to unethical practices, including financial reporting.
Integrity and ethics are delicate jewels. Building integrity in leaders and their organizations takes time, continual effort and can not be feigned. It must be felt in the gut, in the core beliefs that being honest and trustworthy is the right business practice. Accountability is the foundation for authentic business relationships. At least it forces the process of identifying and resolving issues. Authentic people take full and complete ownership for their lives, their choices, thoughts, feelings and actions, without blame or faultfinding.
Take the classic example of Enron. They had a Code of Ethics that addressed its Vision and Values platform RICE (Respect, Integrity, Communication, and Excellence) values statement. At the time, some thought it was a model that other companies should follow. The problem was that this model code of ethics was repeatedly violated by executives.
Enron's accounting problems and subsequent bankruptcy did not emerge out of the blue, nor was there any single identifiable moment when Enron crossed the line between what was ethically acceptable and what was not. Instead, the Enron scandal grew out of a steady accumulation of habits and values and actions that began years before and finally spiraled out of control. Some investigations into Enron's demise indicate that the problem was their business model. Enron's basic business model contributed to its