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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decisions by executives. Excello Telecommunications must adhere to accounting practices and regulations in the organization’s activities to ensure financial reporting is accurate. The SOX Act of 2002, Generally Acceptable Accounting Principles (GAAP), and the AICPA Code of Professional Conduct are some guidelines that the company must follow. However, the pressures of meeting financial goals can tempt employees to practice earnings management. Earnings management can effect financial reporting when
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Act The Sarbanes Oxley Act was enacted in 2002 as a reaction to a number of major corporate and accounting scandals which included Enron, Tyco International, Adelphia, Peregrine Systems, and WorldCom. This Act which is commonly known by the acronym “SOX” was put in place to protect investors from unethical companies practicing questionable accounting standards. The Senate refers to this Act as the “Public Company Accounting Reform and Investor Protection Act” and the House refers to is as the “Corporate
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Effects of Unethical Behavior Article Analysis ACC/291 Principles of Accounting II (AXIA) November 12, 2012 Effects of Unethical Behavior Article Analysis The impact of unethical accounting behavior can be devastating, often leading a company to closure or bankruptcy. Some examples of internal unethical accounting practices include under and overstatement of expenses, revenue, liabilities, and corporate assets, misuse of capital (possibly for personal gain), etc. Examples of external
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State College The Value of Business Ethics To Professional Managers Submitted by: Susana Furtado Business Ethics Professor John Weiss March 26, 2012 The Value of Business Ethics to Professional Managers Ethical management practices have become a highlight of topics in today’s business world. Ethics are the set of moral principles or values that defines right and wrong for a person in management. An organization’s ethics, actions, culture, morals, and management style, all
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could devolve into questionable behaviors. This article is in response to the regulations of the Sarbanes-Oxley act of 2002, that an independent auditing firm be contracted to audit a company in compliance with the Generally Accepted Accounting Practices. Prior to the act, company management hired the auditing firm, negotiated the fee and could request the firm perform other services. The Sarbanes-Oxley Act requires that an audit committee of the company’s Board of Directors hire the auditing firm
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Insight on WorldCom Scandal Table of Contents ABSTRACT 2 The importance of accounting conceptual framework 3 Historical Background 5 The Scandal – what happened 6 PENALTIES 7 How the scandal relates to accounting theory 8 RELATION TO POSITIVE ACCOUNTING THEORY 9 Conservatism Principle 9 Lack of Reliability 10 Lack of Relevance 11 Financial Misstatement 11 Conclusion 12 Bibliography 14 Insight on WorldCom Scandal ABSTRACT The scope of this paper deals with the
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Enron, WorldCom, Tyco, and others have committed financial scandals, which caused the stock market to take a hard hit. Investors and lenders learned from these scandals in the past, and just recently, have become hesitant to invest in any company that they think, or know for a fact, the company is corrupted and/or unethical. “United States regulators and lawmakers were very concerned that the economy would suffer if investors lost confidence in corporate accounting because of unethical financial
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Running head: Ethics in accounting Ethics as an Accountant The main objective of this proposal is to gain insight into the unethical accounting practices of major corporations (with a majority of the focus on Enron, WorldCom, Tyco, and Adelphia) and ultimately exposing the true perpetrators behind these scandals (the CEO's) in an effort to restore credibility in the once revered accounting profession. Many of the people responsible of these crimes are enjoying retirement in lavish homes
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bankruptcy in business history. In the case of both Enron and WorldCom, the causes of fraud surrounded the manipulation and misleading financial reports created by accountants. Enron was accused of lying about its profits and committing a range of inappropriate deals, including hiding the company’s debt so it would not show in the financial statements to the public. Enron was not the only company that made history for fraudulent events. WorldCom, the largest handler of long distance internet data filed
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