David provided statements that did not reflect the company’s current financial crisis, falsely misleading information about the corporation’s financial condition to creditors and investors. By borrowing more money, it would have showed that the company was in the process of losing assets and that would have sent red flags to stockholders to pull out and not invest any more money with the company. “Enron allowed its chief financial officer, Andrew Fastow, to set up a fund called LJM and engage in suspect deals that made Enron's books look better.” This is similar to what David and his friend did, started up a sister company to Global to make their books look good.
Review the AICPA’s Articles of Professional Conduct (see Chapter 1) and comment on any of the standards that have been violated.
Article I Responsibilities
In carrying out their responsibilities as professionals, members should exercise sensitive professional and moral judgments in all their activities.
Article III Integrity
To maintain and broaden public confidence, members should perform all professional responsibilities with the highest sense of integrity.
In Article I and III, I feel that David has violated both. As stated in our text, David was a well-respected CPA, have been doing accounting for years. David should have stepped away from the situation and informed others of what was going on. He had the responsibility to helps others that were being defrauded out of their money.
Article IV Objectivity and Independence
A member should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities. A member in public practice should be independent in fact and appearance when providing auditing and other attestation services.
“Former Enron CEO Jeffrey Skilling reportedly led the company's risky bets to revolutionize the market