the question remains of just how our Country got here. In Enron’s case‚ the direct answer is when “Enron’s directors waived the company’s code of ethics …to allow [Andrew] Fastow (CFO) to run an investment partnership that traded with Enron” (Farrell‚ 2002‚ p. 3). A company’s code of ethic sets principles for members of the group to abide by and to help facilitate understanding of right and wrong. Waiving the code of ethics was morally neutral from a business perspective as all directors
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the rules they set. In Enron case‚ corruption and ethical misconduct were deeply embedded in their business culture where profitability was more important than ethics. In this paper‚ I will address the factors that had led to the development of the culture of profit before principle at Enron. Also‚ I will create my personal code of ethics that will guide me in my professional and personal decision making and doing the right thing when faced with ethical challenges. “Enron: The Smartest Guys in the
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reward structure of the stake holders. Based on the case study do you foresee a need to change the reward structure? Enron‚ Bechtel Enterprises‚ and General Electric—through offshore subsidiaries—formed Dabhol Power Company to build the first phase of a major power plant in Maharastra state in India. Later‚ part of the equity was sold to the Maharastra State Electricity Board. Enron is also a stakeholder as fuel supplier and as the operator of the plant. Bechtel’s construction arm has engineering
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Accounting Indicators. The story of Enron is what made the researcher very interested in the topic. The Enron scandal‚ revealed in October 2001‚ eventually led to the bankruptcy of the Enron Corporation‚ an American energy company based in Houston‚ Texas‚ and the dissolution of Arthur Andersen‚ which was one of the five largest audit and accountancy partnerships in the world. In addition to being the largest bankruptcy reorganization in American history at that time‚ Enron undoubtedly is the biggest audit
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Table of contents: 1. Introduction ---------------------------------------------------------------------------------- -2- 2. The first effect: accountants responsibility increase * Special sections of SOX that increase accountants responsibility by imposing criminal liability------------------------------------------------------------------------------------------ -3- * Accountants independence resulting in a higher responsibility of accountants------- -4- * Fraud decrease
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While consulting at Enron‚ Arthur Anderson CPAs did not maintain independence and performed both consulting services and auditing services‚ which are a violation of the CPA code of ethics. <>History<> In 1887‚ thirty-one accountants created the American Association of Public
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the case study of Enron and Arthur Andersen‚ the latter company and an independent auditor had to fire a partner who was acting unprofessional and had asked employees to destroy documents containing accounting information. This is after the partner realised that the Security and Exchange commission had picked interest in the Enron affairs and was scrutinising and investigation the company accounting information. The court ruled that Anderson Company was liable for the fall of Enron in 2001. Lots of
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AFM 201 – Part 1 Auditing Fall 2007 Group Assignment 2 Publicized Cases of Alleged Audit Failures Involving Large Public Companies 1) Ten Publicized Audit Failures i. Parmalat (2003) - Deloitte & Touche Tohmatsu /Grant Thornton Misleading investors with “Brazen Fraud” was what the United States (US) Securities and Exchange Commission (SEC) had sued Parmalat for in 2003. It all began when Parmalat defaulted on a bond payment worth $185 million. This raised a flag for auditors and banks
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com/what-is-the-computer-misuse-act-of-1990.htm [Accessed 20 April 2010] Computer hope (1010)‚ [Online] How to prevent unauthorized computer access‚ Computer hope‚ Available from: http://www.computerhope.com/issues/ch000464.htm [Accessed 20 April 2010] Enron Corporation (2001)‚ Enron Annual Report 2000‚ Houston‚ Financial department‚ 2001‚ p3 Chris Uba (2009)‚ [Online] Fraudulent Accounting Practice‚ Businessworld‚ Available from: http://businessworldng.com/web/articles/940/1/Fraudulent-Accounting-Practice/Page1.html
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to $4.4 million in 2005 (Labonte‚ & Shorter‚ 2008). At Enron executives had incentives to achieve high-revenue growth because their salary increase and cash bonus amount were linked to reported revenues. “In the proxy statement filed in 1997‚ Enron wrote that “base salaries are targeted at the median of competitor group that includes peer group companies…and general industry companies similar in size to Enron. Employees had incentives to achieve high revenues and earnings targets
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