...Effect of Unethical Behavior Article Analysis ACC/291-Principles of Accounting II June 24, 2013 Dale Wilson Having the correct accounting information in a financial statement gives a business owner certain advantages, such as information on financial transactions. If a business owner has information on when the sales or expenses are increasing or decreasing, he can make decisions that can benefit the company’s bottom line. The same cannot be true if he does not have accurate, or reliable, accounting information. There are also times when having accurate accounting information can lead to unethical practices in accounting because the information in the financial statement may not be beneficial for the business or the shareholders. Such instances made it necessary for the government to enact legislation that makes such practices illegal. There are many situations that might lead to unethical practices and behavior in accounting. Misuse of funds, insider trading, bribery and providing misleading financial information for personal gain are all examples of how businesses participate in unethical practices and behavior in accounting, all of which can lead to the inclusion of incorrect information in a financial statement. Prior to 2002, investors had no protection against corporations that failed to fully disclose financial information. This led to some of the biggest corporate fraud cases, involving companies like Enron and WorldCom. In 2002, because of the unethical practices...
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...Ethical Issues – Bill Services There are many ethical issues going on with Bill that will affect his business and our firm legally and financially. Here are some of the issues: 1) He is planning on filing for divorce. His wife, Rotunda is a large and violent woman who has spent every penny Bill has made over the years. She has a moustache, missing a few front teeth and generally not a nice person. Ethical issues: Bill and Rotunda’s marriage seemed to change after the birth of their last child. Rotunda’s personality changed and she even put on extra weight. Rotunda continued to spend every penny of her husband’s hard earned money. Ethically, he has every right to want to file for divorce. Bill using the fact that she has a moustache and missing teeth are not a factor here. The mention of Rotunda being violent could be an issue as the divorce proceedings are under way. Choosing to divorce a person should be based on something that isn’t going quite right. You do not need to have a specific reason at all to request a divorce, but most states do have the option of using one of the grounds for divorce as your reason. Having one of these reasons can help your case, but if the two of you are not happy, then a no fault divorce would be the way to go. You are both on level ground and can go your separate ways without your record being tarnished. Choosing to get a divorce is not always an easy decision for...
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...1. What is the difference between law and ethics? In general, people elect to trade some aspects of personal freedom for social order. As Jean- Jacques Rousseau explains in The Social Contract, or Principles of Political Right, the rules the members of a society create to balance the individual rights to self-determination against the needs of the society as a whole are called laws. Laws are rules that mandate or prohibit certain behavior; they are drawn from ethics, which define socially acceptable behaviors. The key difference between laws and ethics is that laws carry the authority of a governing body, and ethics do not. Ethics in turn are based on cultural mores: the fixed moral attitudes or customs of a particular group. Some ethical standards are universal. For example, murder, theft, assault, and arson are actions that deviate from ethical and legal codes throughout the world. Whitman, Michael E., and Herbert J. Mattford. "The Need For Security." Principals Of Information Security, 4th Edition. CourseSmart/Cengage Learning, 2014. Web. 22 Mar. 2015. Chapter 3 Pages 90-91 2. What is civil law, and what does it accomplish? Civil: Governs nation or state; manages relationships/conflicts between organizational entities and people. Whitman, Michael E., and Herbert J. Mattford. "The Need For Security." Principals Of Information Security, 4th Edition. CourseSmart/Cengage Learning, 2014. Web. 22 Mar. 2015. Chapter 3 Pages 90-91 3. What are the primary examples of public...
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...Practices p1 Arthur Andersen, one of the largest accounting firms in the United States, “a name that was synonymous with trust, integrity, and ethics” (Ferrell, Fraedrich, & Ferrell, 2011, p. 348), through a loss of its founder Arthur Andersen, and change in its corporate culture resulting in many unethical business transactions that affected multitudes of primary stakeholders had to close its doors in 2002 after 90 years of business. Review the mandated requirements for legal compliance (from chapter 4) and determine which requirements apply to the Arthur Andersen case. Explain your rationale After re-reading Chapter 4 there are five areas that separate the mandated requirements for legal compliance, and I feel the that two apply to the Arthur Andersen case; the protection of consumers, and incentives to encourage organizational compliance programs. In the laws that protect consumers they require businesses to provide accurate information protecting them from financial scams, unfair, fraudulent, or deceptive practices. There are “Gatekeepers” that are in charge of that such as lawyers, financial rating agencies, and financial reporting services that help enforce high ethical standards. This was the issue wan Andersen as there were no such “Gatekeepers” or compliance programs so they used the loopholes to their advantage. Discuss how the issues with the Arthur Andersen case may have played out differently if the Sarbanes-Oxley Act had been enacted...
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...Effect of unethical article ACC 291 June 27, 2013 Julio Medina The unethical behavior of Enron Corporation The unethical habits and behavior's in accounting would be deceptive under financial analysis such as gainings, misuses of fundings, overstating the value of corporate assets or underreporting the existence of liabilities, overdoing revenue as well as understanding expenses. Another unethical systems would be securities fraud, manipulation of the financial markets and bribery. Enron is one of the greatest example that impact the unethical behavior. Enron corporation was an American energy company was formed from the merger of Houston Natural Gas including the inter north a Nebraska pipeline company. Enron employed around 21,000 people and was one of the worlds leading natural gas, pulp, electricity, and communications companies. Enron reported financial situations of were the company constant of institutionalized systematic planning accounting fraud having rumors of corruption to secure contracts in central America. Enron's ethics of coding was created on respect, integrity, communication, and excellence. These values were described as follows. Respect. We treat others as we would like to be treated ourselves. We do not tolerate abusive or disrespectful treatment. Ruthlessness, callousness and arrogance don’t belong here. Integrity. We work with customers and prospects openly, honestly and sincerely. When we say we will do something, we will do it; when we say we...
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...Excello Telecommunications Ethical Obligations Jonathan Carpenter ETH/376 November-3, 2014 Susan Paris Excello Telecommunications Ethical Obligations Up until just recently, Excello Telecommunications has been a very successful business that has never had to worry about unethical implications until competitors took away from the income that was expected to be reported for the end of the fiscal period. The failure to reach the expected estimates for the year has the company leaders worried about investor confidence, stock prices and the yearly bonuses for management. Being back into a corner, the companies CFO, Terry Reed, has decided to book the 1.2 million in sales regardless of the laws and requirements provided by GAAP, SOX, and The AICPA Professional Code of Conduct. If Terry Reed does not comply with all laws and requirements of these accounting authorities, the company could face large enough penalties that will shut down the business for good such as Enron and WorldCom. 2001 marks a big year for corporate fraud which in turn forced the birth of the Sarbanes-Oxley Act of 2002 (SOX). The biggest known scandals of this time were WorldCom, Enron and Tyco. The main purpose of SOX is to force corporate leaders to provide factual documentation based on the sales and expenses of any given company. Excello’s CFO, Terry Reed, has thought of a couple different ways to report the 1.2 million in sales, however, his ideas do not comply with SOX. Reed wants to report a sales transaction...
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...com 224-595-3964 | 11/16/2010 | The recent subprime meltdown and the economic crisis that followed have wielded few successfully prosecuted cases of fraud in the financial sector. This can partly be explained by the complex nature of the financial instruments that were used, which are hard for regulators to decipher and for judges to interpret whether any fraud occurred. It seems that the missing ingredient in most prosecutions has been the absence of any forthcoming information from insiders. Whistle blowing has been almost nonexistent during the run up to the financial crisis and its aftermath. This is reflective of the negative stigma that is associated with whistle blowing in most businesses and corporations. Combined with a culture of silence that is prevalent in the finance and accounting industries this is not a big surprise. Federal regulators and congress have been encouraging whistleblowers to step up in recent years, however more must be done. Regulators must continue to improve protection and incentives for whistleblowers to come forward. In addition corporate culture must change in its negative view of whistle blowing. Most importantly though professionals, especially accountants must understand that they are serving the public interest and thus must step up and reveal any fraudulent or unethical activities that hurt the public. Whistle blowing is hard to encourage and federal authorities have been doing terrible job of it until recently. The trend has been...
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...Impact of Unethical Behavior Analysis Name ACC/291 Date Instructor Name The unethical practices & behavior in today’s business accounting often goes unchecked, because the actions directly affect management or executives, since they usually control this accounting hence the results. If someone thinks their job might be in jeopardy they may falsify thinks for these members of management. As it seems obvious, falsifying or altering business documents such as sales receipts, or tampering with reports would be considered unethical practices. According to Anonymous Employee (n.d.), "Among the most common unethical business behaviors of employees are making long-distance calls on business lines, duplicating software for use at home, falsifying the number of hours worked, or much more serious and illegal practices, such as embezzling money from the business, or falsifying business records.” (para. 1). Among those situational examples which include embezzlement of funds by an accountant from their employers for financial gain also include accountants receiving corporate pressure from their client to report false information and having unrealistic objectives and deadlines. “An accountant may decide to work for a company even though a conflict of interest may exist. If the accountant is owed money or has a significant stake in a firm, he or she may not be the ideal individual to prepare certain companies' financial statements.” (Jacobsen, 2008, para. 10). The Sarbanes-Oxley...
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...Unethical Behavior ACC/291 Unethical Behavior Unethical accounting practices in business can take place for many varied reasons. The leading factor according to a study conducted for the American Management Association (AMA),is “pressure from management or a Board of Directors to meet unrealistic business objectives or deadlines” (Accountingweb, 2006). If the person preparing the financial documents for a company feels their job may be in danger if certain goals are not met they may alter the documents to reflect the desired numbers. The individual preparing the statements may also feel that the appearance of success may reflect well on them personally, thus advancing their standing in the eyes of the Board of Directors. Another reason someone may behave unethically is simple greed. Stealing money that may be seen as insignificant can be a temptation to some. The idea that stealing from a corporation is somehow different than stealing from an individual may be another rationale some people use to convince themselves that the behavior is somehow less unethical. Greed may also come into play if the person preparing the documents is the owner of the company. They may want to make their company appear more desirable to potential investors, thus making their company worth more money. The reason for unethical behavior may also stem from what on the surface...
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...is the use of capital punishment, informally known as the death penalty. There are two main sides to this topic; some people want to abolish the death penalty, while others want to continue or even increase its use. The people that want to abolish the death penalty view it as unconstitutional, as they see it as “cruel and unusual;” while others view the death penalty as an appropriate punishment that fits the horrendous crime of murder. The death penalty has been shown to have a deterrent effect on crime, which is why the U.S.A and other nations worldwide should continue the use of capital punishment (Muhlhausen). HISTORY The death penalty has been around since the start of time. It is...
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...Running head: IMPACT OF UNETHICAL BEHAVIOR ARTICLE ANALYSIS Impact of Unethical Behavior Article Analysis Donna Sutton University of Phoenix Financial Accounting II ACCT 363 VERN May 09, 2010 Impact of Unethical Behavior Article Analysis The impact of the financial crisis created by such companies as Enron gave a reason for Congress to address some of the unethical practices of accountants. The American public no longer trusted accountants after losing retirements and life savings after making investments in companies that were reporting false financial statements. President George Bush signed the Sarbanes-Oxley Act into law in 2002 to try to avert any future dealings of an unethical nature (Dummies.com) The Sarbanes Oxley Act states that companies must enact internal controls to counteract fraud, deceit and wrong doing by its auditors, CEO’s, financial personnel, and accountants when reporting the financial statements for their companies. CEO’s can no longer say they were unaware of deceitful financial statements. They will be held responsible for the company’s financials and also be penalized. This act will prevent companies from reporting inaccurate financial statements to the public and allow Americans to make informed investment decisions from accurate financial statements. Confidentiality is a huge concern for clients of companies. This issue was addressed in Ruling 112. A client is now given the choice of sharing their information with other companies...
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...Unethical Behavior Analysis ACC/291 Unethical Behavior Analysis “The Sarbanes-Oxley Act of 2002 was intended to improve corporate governance and increase the transparency of financial audits” (Cosgrove, 2006). This was an effort to help curb unethical behavior in the corporate world. The effort was worth it, considering that “that 18% of employees perceived their companies as having a strong ethical culture - more than double the 2007 rate” (Bannon, 2010). This still does not stop all unethical behavior in the workplace. There are several reasons that unethical behavior takes place, but today we will focus on one…following your superior’s example. Superiors Behavior Employees will look to their immediate supervisor to determine what behaviors are allowable. If the supervisor is a no nonsense by the book leader, then the associates will know that they better do the same or face the consequences. And on the other hand if the supervisor is known to work around the rules, then their example is showing that it is acceptable to not follow all the rules. If a supervisor tells an employee that they don’t care how a task is done as long as it is done in the allotted amount of time or as long as the company or section looks good. It opens doors for unethical behavior, such as manipulating the numbers on financial reports to show better figures than are actually there. The Sarbanes-Oxley Act of 2002 By having guidelines for proper auditing set by...
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...Corporation scandals, such as Enron, initiated the enactment of the Sarbanes-Oxley Act 2002 also known as SOX. Prior to its existence, the public became aware of Enron’s weak internal control, misleading earnings reports, and conflict of interests between executives and their chief auditor.Misleading information provided in false earnings reports allowed Shareholders and employees to continue to investing in Enron. Misappropriation of funds invested and eventually Enron filed bankruptcy in 2001. The fall of Enron had an impact that caused loss of jobs for thousands, the loss of retirement funds for all employees and no returns for their investors. The unethical practices of Enron caused the public to lose trust in the financial markets. This prompted a written legislative act addressing compliance in fair and accurate reporting of financial disclosures of corporations. In 2002, Paul Sarbanes, a Democratic Senator from Maryland, and Michael Garver Oxley, a Republican Congressman from Ohio serving in the House of Representatives, each introduced bills in their respective bodies that would result in legislation that would later bare their name. The Sarbanes-Oxley Act of 2002 passed both houses by overwhelming margins; 423 to 3 in the House and 99 to 0 in the Senate. On July 30, 2002, President George W. Bush signed it into law (sox-online, 2012). Sox directly impacts the following groups: * CPAs and CPA firms auditing public companies * Publicly traded companies...
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...in July 2002 with the goal of improving the scope of declared information and the rectitude of financial statements of U.S. publicly traded companies through increasing their reporting standards, the implementation of independent audits, and the institution of steep penalties for corporate executives who submit fallacious filings (Botes, 2012). These actions provide increased investor assurance of the accuracy of public financial filings through improving their reliability and breadth of disclosure (Botes, 2012). The following report shows how the Act has impacted outside independent audit firms, the accuracy of public company financial statements and the cost of capital for public companies. The report further discusses the main advantages and disadvantages of the law, what changes should be made to it, and why the legislation cannot guarantee the accuracy of public company financial statements despite the attention CEOs and CFOs are paying to the law. Outside Independent Audit Firms Under SOX independent audit firms perform audit reviews of financial filings, in accordance with the Generally Accepted Accounting Principles (GAAP), and under the direction of the Public Company Oversight Accounting Board (PCOAB), in order to assure the disclosure and accuracy of financial filings (Livingstone, 2003; Botes, 2012). Botes notes these reviews provide a uniform platform for sound financial reporting and act as a deterrent of fraudulent accounting practices (2012). She also stated the...
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...study standards of conduct, such as philosophy, theology, law, psychology, or sociology” (Resnik, 2011). Considered by many economists to be the worst financial crisis since the Great Depression, the financial crisis of 2007 was primarily due to the collapse of the housing industries subprime mortgage market. Residential mortgage-backed securities are commonly issued bonds that are backed by thousands of residential real estate mortgages. The Goldman Sachs case was comprised of subprime mortgages. Most business organization possess a mission statement, a code of ethics or rules to follow to be able to limit the ethical issues that may arise within the Institution, Goldman Sachs did not have any of these. In exploring ethical behavior in the banking and financial institutions whose sole existent is to increase profits through the sale of consumer loans. In 2005, the banking industry started issuing subprime mortgage loans to consumers regardless of their income qualification. “The collapse in prices precipitated the collapse in banking profits, prompting a call for bailing out the banks. Government bailouts effectively rewarded financial institutions for “bad” behavior” (Watkins, 2011). Bottom line, financial institutions were being rewarded for unethical behavior when they should have been punished. When the financial crisis erupted in 2007, Goldman Sachs gave into pressure from federal regulators to convert themselves into bank holding...
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