Social responsibility Carroll proposes that the managers of business organizations have four responsibilities: economic‚ legal‚ ethical‚ and discretionary. 1. Economic responsibilities of a business organization’s management are to produce goods and services of value to society so that the firm may repay its creditors and shareholders. 2. Legal responsibilities are defined by governments in laws that management is expected to obey. For example‚ U.S. business firms are required to hire
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Enron case 1. What activities and practices of Enron’s management team do you believe were unethical and/ or illegal? Concealing debt By using SPEs‚ Enron’s balance sheet understated its liabilities and overstated its equity and earnings. Enron disclosed to its shareholders that it had hedged downside risk in its illiquid investments using special purpose entities which were lies. Enormous spending Extravagant expenses were rampant in the company which included enormous salary expenses
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tangible assets of Enron were on the balance sheet of partnerships that were run by high-ranking officials within the corporation and these partnerships were recorded as related parties‚ but were never consolidated so that the debt never showed up on Enron’s financial statements‚ as it would have if statements were prepared according to GAAP. Arthur Andersen chose to turn a blind eye to these discrepancies by certifying their financial statements as true & fair‚ and therefore failing miserably in
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Ethical Observations Sean Kearns ACC291 May 27‚ 2012 Unethical accounting behavior and the resulting practices of it within businesses today is a very hot topic since the Enron accounting scandal of 2001. One might ask how does a scandal of this proportion come to be and can it happen again? What situations could lead to unethical behaviors and practices in accounting today that might cause history to repeat itself? The author intends to answer these questions and shed light on some insight
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a component of the audit risk model‚ refers to the susceptibility of the accounts to material misstatement‚ without regard to the systems internal controls. Inherent risk is a function of the nature of the client’s business‚ the major types of transactions‚ and the effectiveness and integrity of its managers and accountants. A clear understanding of the audit client’s business model is essential in assessing inherent risk. Paragraph 9 of PCAOB Auditing Standard No. 5 entails the planning of t
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effective? In what ways was it the catalyst towards Enron’s collapse? The culture of Enron was influenced by a variety of factors. The combination of executive greed‚ a lack of corporate social responsibility‚ no ethics and get-it-done attitude contributed to Enron’s collapse. In addition the deregulation and lack of governmental oversight contributed to Enron’s wild business practices. This coupled with strong political lobbying‚ questionable ties with high level governmental official brought
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coerce or mislead each other‚ so that all trades are morally voluntary. In other words‚ a free market economy is "an economic system in which individuals‚ rather than government‚ make the majority of decisions regarding economic activities and transactions. In social philosophy‚ a free market economy is a system for allocating goods within a society: purchasing power mediated by supply and demand within the market determines who gets what and what is produced‚ rather than the state. The free
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Table of Contents Title Page 1. Introduction 2 2. History 3 a. Formation 3 b. Operations 3 c. The Success 4 d. All that glitters is not gold 4 e. The Fraud 4 3. Products 5 4. Enron Scandal – The Company Fraud 8 f. What Happed? 8 5. Techniques used in the Company Fraud 9 g. Revenue Recognition 9 h. Mark-to-market accounting 9
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Brham S. Inocencio BSA IV-A CASE 01 – Enron Corporation 1. List three types of consulting services that audit firms have provided to their audit clients in recent years. For each item‚ indicate the specific threats‚ if any‚ that the provision of the given service can pose for an audit firm’s independence. In the recent years‚ auditing firms provides the following consulting services to their clients: a. Internal auditing b. Design of accounting systems c. Various types of Information Technology
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Nebraska pipeline company. Initially‚ Enron was merely involved in the distribution of gas‚ but it later became a market maker in facilitating the buying and selling of futures of natural gas‚ electricity‚ broadband‚ and other products. However‚ Enron’s continuous growth eventually came to an end as a complicated financial statement‚ fraud‚ and multiple scandals sent Enron through a downward spiral to bankruptcy. During the 1980s‚ several major national energy corporations began lobbying Washington
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