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Ethical Violations

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Ethical violations
Sharon Miller
Colorado technical University online

(MGM365, Ms. Holy Faust 9/5/2011 Portions of this task had previously submitted) This task asked us to pick a business that has committed an ethical violation as well as a legal violation. I will discuss the impact of the violations as a consumer or investment. Also discuss why there is an increase in these types of legal and ethical violations. What does this say about the United States business environment? The company that I chose is KP MG. KPMG is an accounting firm.

In August of 2005 KPMG admitted to criminal wrongdoing. They will pay $456 million for, finds, restitution, as well as penalties, to stay out of jail. From 1996 until 2003, KPMG and a lawyer decide to set up four phony tax shelters. The name of the four tax shelters is FLI P, OPIS, BLIPS, and SOS. These tax shelters targeted people who needed $10,000,000 to$ 20,000,000 in tax loss. Instead of paying the IRS they paid KPMG a percentage of the tax loss. They also file fraudulent tax returns. These returns were phoning. Even though KPMG tax department told the nine individuals that the tax shelters would not stand up to IRS scrutiny, they did the tax fraud anyway. The Tax fraud cost the United States at least $2.5 billion in lost tax revenue.

KPMG were ordered to pay the following amounts, 100 million in fines, hundred and 28 million in criminal fines, 228 million in clinical restitution. Also KPMG had to stop doing two areas of practice. They were tax help and permanent adherence to a higher tax practice standard. Also with their preparation of tax returns. The agreement also said that KPMG is required to put into place and maintain an effective compliance as well as an ethical program. There are three elements that cause fraud to happen. Number one is perceived pressure; number two is perceived opportunity;

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