...White collar crime The phrase white collar crime was first used by Edwin Sutherland in 1939 during a speech to the American Sociological Society. He defined white collar crime as a "crime committed by a person of respectability and high social status in the course of his occupation."(Sutherland, “White-Collar Criminality."). Today, white collar crime refers to illegal offenses that are generally committed in the business or professional setting (white collar versus blue collar jobs) to achieve financial gain. Crimes that do not involve physical violence, and that relate largely to financial matters, are often called white collar crimes. Corporate corruption is out of control for two main reasons. First, big companies are now multinational, while governments remain national. Big companies are so financially powerful that governments are afraid to take them on. It is very important to study the cause and the possible solution for the increase in numbers of white collar crime; our focus needs to shift from Blue Collar Crimes to White Collar Crimes. U.S.A spends nearly $50 billion on fighting Blue Collar Crimes, not even quarter of that amount is spent on fighting White Collar Crimes. Hardly a day passes without a new story of malfeasance. Every Wall Street firm has paid significant fines during the past decade for phony accounting, insider trading, securities fraud, Ponzi schemes, or outright embezzlement by CEOs. A massive insider-trading ring is currently on trial in New York...
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...What is a whistle blower? What is a whistle blower? To the untrained eye, you may think that a whistle blower is a person who controls a sport or game with a loud device called whistle. In reality, a whistle blower has become an important part of the American business landscape. So what is a whistle blower? According to Blacks Law Dictionary, a whistleblower is an employee who turns against their superiors to bring a[n] problem out in the open. BusinessDictionary.com states that a whistle blower is a person who discloses improper or criminal activity within an organization. Finally, under Sarbanes Oxley, “A “whistleblower” is someone, usually an employee, who reports an employer who has broken the law to an outside agency.” Under this very important act, whistleblowers are protected by federal and state laws. Employers may not retaliate against them for reporting misconduct. Whistleblowers may not be fired or otherwise mistreated, and in some instances the government may reimburse them for costs incurred as a result of reporting. Most importantly, the federally enacted statute of Dodd – Frank defines a whistle blower as, “Any individual who provides . . . information relating to a violation of the securities laws to the Commission in a manner established, by rule or regulation, by the Commission.” There are two types of whistle blowers: external and internal. An internal whistle blower is a person who reports misconduct on a fellow employee or superior within their company...
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...Whistleblowing and Sarbanes-Oxley LEG 500 LEG 500 Whistle blowing has its origins from an example of law enforcement blowing a whistle when someone finds a crime or some wrongdoing process in a government. So when wrongs are taking place in government, the public they serve suffers (Chambers, 2014). The government is supposed to be open. Whistleblowers have to care about the issues that are going on in the workplace for them to commit such energy into the act. They have ethics and morals. The whistle blower is passionate about their work and its proper execution (Chambers, 2014; Lowry, Moody, Galletta, & Vance, 2013). The recent case of September 2014, Katherine Mitchell, Paula Pedene, and Damien Reese brought to light the wrongdoing at Phoenix Veteran Affairs hospital where records on appointment data were falsified to hide delays in treatment. There was financial mismanagement in the agency which was later confirmed by the inspector general after the three exposed the issue (Hicks, 2014; Lee & Fargher, 2013). Paula was punished by the management because she spoke against financial mismanagement in the hospital. She was given a desk and a job in the basement. Katherine's supervisors tried to sabotage her career by giving her a position of overseeing quality of patient care. Given that the three were protected under the Sarbanes Oxley act, they were later promoted by the agency. In this way whistle blowing is encouraged not punished. The three were justified...
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...Whistle Blower Whistle blowing can generally define as a process rather than an event (Near and Miceli, 2002). Whistleblower give the information of scam or the dishonest act of the company or other employer or other parties as well as the government. Whistleblower is a person or the entity making a protected act for illegal or inappropriate act. Whistleblower can be employees, customers or the general public. For an organization it happens to have an internal or external whistleblower. Most of the whistleblower is an internal whistleblower, who only reports the misconduct within the organization. However, an external whistleblower reports the misconduct out of the organization which includes the lawyers, the media, or the different agencies. The importance of an existence whistle blower especially in an organization. It helps to perform uncommon tasks likely as payment are insufficient to support financially of the program and services that provided by the Americans. For instance, Healthcare, the Pharmaceutical industry and Medicare. Moreover, the government needs the help of whistle blower due to the government has insufficient of time, resources and most of the fraudulent claims made against it every year. Yet, whistle blower has made a part of an implication of committing to a fighting fraud. If a person choose to reports the fraud you have witnesses, it will have a guide to every step of the way (Quitam-lawyer.com, 2014) ** In this bleak institutional context, whistle...
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...Is Greed Good? Whistle Blowers in Modern Business PHL-212 Dr. Jean Suplizio Scott MacKenzie Word Count :1320 Introduction Throughout history, there have been those who feel that the law is beneath them. This is highly unethical. Many companies have been destroyed because of poor ethical decisions. In turn, the person or people who called out their employers for violating the law end up losing their jobs, and in some instances, getting black-balled in their line of work. There are those who profit from blowing the whistle, aside from that is the risk really worth it? The answer is yes. In spite of the negative employment aspect, whistle blowing shows that a person has enough integrity to risk themselves in order to correct a bad situation. Three whistle blowers come to mind when the topic of ethical integrity arises; Sherron Watkins (Enron), Harry Markopolos (Bernie Madoff), and myself in my current place of employment. Each of us took the ethical high road and risked it all to try and make right what was/is blatantly wrong with the companies or people in question. Watkins & Enron Sherron Watkins worked at Enron for eight years. She sent a seven page letter to her employer mentioning the unethical accounting that was happening in the employee retirement sector. Sherron called it a Ponzi Scheme and worried that those who were making money off other people’s retirement would end up cashing and burning when this...
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...employee to “blow the whistle” on a fraudulent scheme they uncover within the firm? Employee handbooks are usually given to employees when they are hired. Supervisors are responsible for ensuring that new employees read the handbook, still there is no guarantee that employees read and understand the whistle-blowing policy. The measure can be taken is by finding out the root cause of employees resistance on blowing the whistle on the fraudulent. There are some barriers to ‘whistle blowing’ such as fear of retaliation, duty of loyalty and confidentiality to the employers, cultural barriers, fear of alienation by peers and lack trust in protection. The Organisation for Economic Cooperation and Development (OECD) 2003 have recommended complaint handling methods such as develop complaint mechanism to deal with allegations of non-compliance, provide clear rules and procedures for whistle blowing, take steps to ensure those who report the violations in compliance with stated rules are protected against reprisal and ensure that the complaint mechanism themselves are not be abused. Besides that, Multinational Enterprises should refrain from disciplinary or discrimination action against the employees who make the bona fide reports to management or to the competent public authorities on practices that contravene the law. The Whistleblower Protection Act 2010 (WPA) which came into force on 15 December 2010 should be used to encourage employee to blow the whistle. This act is intended...
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...Alyssa Filkins Module 11 – Enron Professor White 07/16/2014 1) The Enron debacle created what one public official reported was a "crisis of confidence" on the part of the public in the accounting profession. List the parties who you believe were most responsible for that crisis. Briefly justify each of your choices. Arthur Andersen & Co. – This company that started many years ago preached about honesty, integrity, and a strong work ethic. Through their motto that was widely portrayed and talked about, they instilled trust with their clients, auditors, regulators, and potential investors. When their significant role in Enron’s downfall and in turn, fraudulent practices, was brought to light, it was shocking that a company with such high ethical standards would fall short of anything less than what they preached since day one. By preaching such high standards and doing the opposite, the confidence in all companies of the like certainly decreased. Of course, the chief officers/executives were responsible for the fraudulent financial reporting and therefore, confidence crisis. Kenneth Lay, Jeffrey Skilling, and Andrew Fastow intentionally participated in financial reporting tactics that violated GAAP and general ethical standards. This caused such a crisis because investors, clients, and the general people expected a lot of ethical success from Enron and Andersen because they appeared to be doing good, legitimate day to day business and spoke very highly of...
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...Case Incident 2 WHISTLE-BLOWERS: SAINTS OR SINNERS? Corporate whistle-blowers, individuals who report company wrongdoings, are often lauded for their courage and integrity. For example, one famous whistle-blower, former Enron executive Sherron Watkins, was named by Time magazine as one of 2002’s Persons of the Year. Given that whistle-blowers face unemployment, and, often times, ridicule from their company, many people do not come forward to report illegal activity. To encourage whistleblowers, the whistle-blower law, adopted in 1986, pays informants as much as 30 percent of legal fines reaped during lawsuits. With settlements often exceeding $100 million, whistle-blowers can sometimes see huge payoffs. Some experts are concerned that these payoffs are creating a culture where employees quickly report wrongdoings instead of trying to rectify the situation internally. Douglas Durand, for example, was a former vice president of sales at TAP Pharmaceutical Products. In 1995, he began to suspect that TAP was conspiring with doctors to defraud Medicare. Pharmaceutical companies routinely provide doctors with free samples of the latest drugs; however, Durand believed that TAP was working with doctors to bill Medicare for the free drugs, a practice that is against federal law. Later that same year, Durand became more worried when he discovered that TAP had decided to pay a 2 percent fee to individual doctors to cover “administrative costs”—a kickback in Durand’s opinion. Durand...
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...Is it worth blowing the whistle? Ethics, values and beliefs all play a role in accounting. But when it comes being a whistleblower you can see where these things can start to conflict with one another. Even though there are laws to protect a whistle blower very few people do and those who do blow the whistle aren’t always happy after it’s done. At the same time those who do report do receive benefits and can say they truly have honesty and integrity. Ethics is more than just what’s right and wrong. What is right to one person can be considered wrong to another. Ethics are based off of what we know to be morally right or wrong. Smoking marijuana is wrong in the United States but considered ordinary or right in Amsterdam. Some ethical decisions go further than knowing what is the right thing to do, sometimes our emotions can get the best of us and leave us making poor decisions. When deciding the ethical thing to do in a situation you must set your emotions aside and base your decision on what you know or consider being right. Ethics is a large part of accounting. You are constantly faced with decisions where you need to decide the ethical thing to do. Whistleblowing involves the act of reporting wrongdoing within an organization to internal or external parties (Eaton & Akers, 2007).As a whistleblower your ethical decisions are what decide if you should blow the whistle. You know that adjusting numbers such as Enron did is wrong and unethical. Many people are afraid...
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...and economic crisis witnessed from 2007-2010. Sarbanes-Oxley established heightened standards for the boards and management of both public companies and public accounting firms. The law was passed after the myriad scandals that rocked American securities markets, e.g., Enron, WorldCom, Tyco, and others. Sarbanes-Oxley is wide in scope, establishing numerous responsibilities on the part of corporate boards, with compliance closely monitored by the government. While employees commonly discover fraud before other monitors, many are reluctant to report it. In an effort to encourage employees to report wrongdoing, Section 301 of the Sarbanes-Oxley Act of 2002 (SOX) requires audit committees of public companies to establish a reporting channel that allows employees to confidentially and anonymously submit claims involving questionable accounting or auditing matters. Despite these internal whistle blowing programs, there is still concern over employee willingness to report wrongdoing. Recently, the Securities and Exchange Commission (SEC) adopted the Dodd-Frank Wall Street Reform and Consumer Protection Act. Provisions of this Act include an external mechanism to encourage employees to whistle blow by providing monetary incentives as a means of balancing the risks of coming forward. Thus, the current regulatory environment provides employees of public companies with anonymous internal and external reporting channels. Companies, audit committees, and...
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...Applying Ethics in Business Judy Blair-Jackson Kaplan University Ethics in Business Since the past decade more companies are focusing on incorporating ethical principles in business transactions and decision-making. One of the factors that have caused this shift on ethical focus is the financial crisis in the corporate world. Many reputable companies, CEO’s, CFO’s, and auditors have been implicated for fraudulent business activities. It is hoped that if businesses focus on building an ethical culture in the organization this may act as a deterrent to management and employees engaging in unethical business transactions and decision-making. Schein (1985) posits that the “organization’s culture is a cognitive framework, consisting of attitudes, values, behavioral norms, and expectations shared by organization members” (as cited in Brooks & Dunn, 2012, p. 254). Organizational culture can positively or negatively affect employees’ behavior. Where there is no focus of management on ethical behavior, employees may get the wrong message about the company’s stance on ethical principles. On the other hand where management displays and discusses ethics with employees, this shows a commitment from them that the company’s values ethical principles and behaviors. Management’s commitment and support to ethical standards must be evident through their actions. Brooks & Dunn (2012) stated that “it is vital that organizations create an environment culture where appropriate shared...
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...Business Ethics and Corporate Responsibility Professor Dr. Dana Legette-Traylor Unit 5 Case Study Accounting for Enron By Accounting for Enron 1. Donald Duncan had responsibilities to everyone mentioned and he definitely failed by acting negligently and by showing a complete lack of ethics throughout his involvement with Enron. Due to the fact that Donald Duncan was the head auditor he had a responsibility to maintain the highest professional accounting and auditing ethics, and to lead his team morally as possible. When people are seeking wealth without thinking about who they hurt in the process they will continue to cheat and wait until there is no going back to correct the issue. Auditors were taught to maintain ethics and to be as unbiased as possible and to be very aware that fraud can present its self at any time. Duncan should have made sure that he provided the shareholders with a detail audit report that is accurate to ensure them that everything is okay or if something is needs attention. But Duncan in this case was deceiving the shareholders because his boss instructed him to do so for a very large amount of payment. When Duncan got rid of the documents he incriminated himself right away because he was trying to hide the evidence that he played a part in the scandal. 2. There is nothing wrong with aggressive tactics when it comes to accounting because companies can lose when this practice is unethical. A person can be as aggressive as possible so as...
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...Polytechnic State University, San Luis Obispo Roselyn E. Morris, PhD, CPA Chair and Professor of Accounting Texas State University-San Marcos Boston Burr Ridge, IL Dubuque, IA Madison, Wl New York San Francisco St. Louis Bangkok Bogota Caracas Kuala Lumpur Lisbon London Madrid Mexico City Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto Table of Contents Chapter 1 Integrity: The Basis for Ethics in Accounting 1 What Is Ethics? 1 Definition 1 Application of Ethical Reasoning in Accounting DigitPrint Case 33 32 Conclusion 34 Discussion Questions 34 Endnotes 36 Chapter 2 Cases 37 2 Case 2-1: A Faulty Budget 38 Case 2-2: Better Boston Beans 39 Case 2-3: Eating Time 40 Case 2-4: Is Internal Whistle-Blowing "Right"? Case 2-5: Play Ball 43 Case 2-6: Supreme Designs, Inc. 44 Case 2- 7: The City of West Buckle 46 Case 2-8: The CPA Review Course 47 Case 2-9: The Ethics ofiPod-ing 48 Case 2-10: The Tax Return 49 Distinguishing between Ethics and Morality Religious and Philosophical Foundations of Ethics 3 Teleology 4 Deontology 6 41 Acting with Integrity Personal Integrity 8 7 The Moral Point of View 7 The Six Pillars of Character.... 8 Trustworthiness 8 Respect 10 Responsibility 10 Fairness 11 Caring 11 Citizenship 12 Chapter 3 Ethical Decision Making in Business 50 What Is Business Ethics? 51 Ethical Issues in Business 51 Virtue, Character, and CPA Obligations 12 Scope and Organization of the Text 12 Conclusion 14 Discussion...
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...Accounting Ethics Session 6 Governance, Accounting, and Auditing, Post-Enron Group 1: Student Name__Seven Autrey_____________________________________ Student Name__Duc Nguyen_____________________________________ Telling the Enron Story Name five ethical problems and the existing conditions that caused the Enron fiasco. Explain each. 1. Fiduciary Failure – the board of directors failed to safeguard the companies from many inappropriate practices. 2. High Risk Accounting – Enron allowed high risk accounting in that the partnerships with Chewco and LJM1 and LJM2 did not conform with accounting rules 3. Enron had extensive undisclosed off-the-books activity. There were billions of dollars in off-the-book assets and liabilities. 4. Excessive Compensation – There was a cash drain caused by the 2000 annual bonus and performance unit plan. 5. Lack of Independence – There were financial ties between Enron and board members. Arthur Anderson provided internal auditing services as well as consulting services. Accounting 1370 Accounting Ethics Session 6 Governance, Accounting, and Auditing, Post-Enron Group 1: Student Name__Carol Cates_____________________________________ Student Name__Brenda Bohm____________________________________ Telling the Enron Story Name five ethical problems and the existing conditions that caused the Enron fiasco. Explain each. 1. At Enron, a lack of integrity was built into the foundation of the company from...
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...The Enron Scandal Case Study FACTS OF THE CASE Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Enron's predecessor was the Northern Natural Gas Company, which was formed during 1932, in Omaha, Nebraska. It was reorganized during 1979 as the main subsidiary of a holding company, Inter-North which was a diversified energy and energy related products company. During 1985, it bought the smaller and less diversified Houston Natural Gas company > Employed approximately 20,000 staff > One of the world's major electricity, natural gas, communications, and pulp and paper companies. > Revenues of nearly $40.1 billion. Enron was almost universally considered one of the country's most innovative companies. The company continued to build power plants and operate gas lines, but it became better known for its unique trading businesses. Enron’s Line of Business Enron was originally involved in transmitting and distributing electricity and natural gas throughout the United States. The company developed, built, and operated power plants and pipelines while dealing with rules of law and other infrastructures worldwide. Enron owned a large network of natural gas pipelines, which stretched ocean to ocean and border to border. Enron Corporation represented one of the largest fraud scandals in history. As a result of the fraud investigations, the company was forced to file for bankruptcy in December 2001. Enron was “a provider...
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