MGT320 Portfolio Project Post-Enron Era Ethics The time for change is now! CEO’s must continue to be held accountable for the accuracy of their financial statements, and the performance of their company. To assure the accuracy of a publicly traded company’s financial status reporting, an additional requirement of an outside industry experienced auditing firm is needed, as well as performance based pay contracts for publically traded companies’ officers. The goal is simple, change the mindset
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that are filed. If the financial reports are discovered to be untrue, such acts of noncompliance are fines, imprisonment, or both, depending on the severity. The Act was designed for publicly traded companies only, in reaction to scandals such as Enron, WorldCom, and Tyco. These scandals cost investors billions of dollars when the companies collapsed, or the stocks plummeted. These companies altered or destroyed records, defrauded shareholders, or “cooked the books”. When a company cooks the
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employees in that firm’s Houston office shredded certain Enron audit workpapers during the midst of a federal investigation of the large energy company. The decision to destroy those workpapers ultimately proved to be the undoing of the prominent accounting firm. A few years later, a felony conviction for obstruction of justice would effectively put Andersen out of business. Ironically, at the same time that the Andersen personnel were shredding Enron workpapers, three senior members of the NextCard,
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FROM GREAT TO GHASTLY: HOW TOXIC ORGANIZATIONAL CULTURES POISON COMPANIES THE RISE AND FALL OF ENRON, WORLDCOM, HEALTHSOUTH, AND TYCO INTERNATIONAL David R. Lease, Norwich University Abstract This paper presents an analytical and comparative study of four recent corporate scandals involving organizations that had previously been recognized as both ethically and organizationally sound. Based on these case studies, the following issues are discussed: (1) The role of leader behavior and organizational/leadership
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accounting behaviors and the ineptness of detecting the inaccuracies in corporate financial statements. In 1985, InterNorth and Houston Natural Gas merged and created a 38,000 miles pipe line network company which was named Enron in the following year, headed by Kenneth Lay. Enron Corporation started out as an energy trading and communications company based in Houston Texas. Within 10 years, it was named America’s Most Innovative Company by Fortune magazine, retaining the title for five consecutive
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the reasons for and the consequences of the fall in death rates since 1900Examine the reasons for and the consequences of the fall in death rates since 1900Examine the reasons for and the consequences of the fall in death rates since 1900Examine the reasons for and the consequences of the fall in death rates since 1900Examine the reasons for and the consequences of the fall in death rates since 1900Examine the reasons for and the consequences of the fall in death rates since 1900Examine the reasons
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The Rise and Fall of Arthur Andersen LLP In October 2001, Enron was accused of overstating their earnings in the last few years in excess of $1 billion dollars (Doost, 2001). At the same time, Arthur Andersen, one of the most reputable auditing firms, was responsible for auditing Enron’s financial statements. The Security Exchange Commission (SEC) ordered Arthur Andersen to provide all relevant Enron documentation and auditing files. Going against Arthur Andersen’s impeccable reputation of honesty
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awarded /100 /100 T213 U22712 Assignment September 2013 QUESTION (TASK 1 weighting factor: 40% of total CW marks) Enron: What Caused the Ethical Collapse? Kenneth Lay, former chairman and chief executive officer (CEO) of Enron Corp., in an introductory statement to the revised Enron Code of Ethics issued in July 2000, wrote: “As officers and employees of Enron Corp., its subsidiaries, and its affiliated companies, we are responsible for conducting the business affairs of the companies
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1. Explain the meaning of “creative accounting” and “earnings management”. Earnings management defines as the choice by a manager of accounting policies or real actions that affecting earnings, in order to achieve some specific reported earnings objective. Earnings management includes both accounting policy choice and real actions. There are two categories of accounting policies which are the choice of accounting policies per se and the discretionary accruals. One is the choice of accounting
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What role did the CFO play in creating the problems that led to Enron’s financial problems? In order to prevent the losses from appearing on its financial statements, Enron used questionable accounting practices. To misrepresent its true financial condition, Andrew Fastow, the Enron’s CFO, takes his role involving unconsolidated partnerships and “special purpose entities”, which would later become known as the LJM partnership. Taking advantage from the SPEs’s main purpose, which provided the companies
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