scandal was colossal‚ and rocked the industry and brought down top executives. The rapid growth of the company and the fraudulent activity impacted thousands of stakeholders. Scrushy was not thinking about the open system concept and the significance of his decisions on stakeholders. The relationships between all the departments and entities at HealthSouth were affected by his fraudulent activities (Nassar‚ 2007).
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Enron Scandal Enron was able to successfully engage in fraudulent financial activities due to the failures of corporate governance practices in addition to other relevant factors. This paper will briefly cover some of these issues and offer suggestions for prevent similar future malpractice. External Corporate Governance The key external governance failures in the Enron Scandal involve oversights by regulators‚ creditors‚ auditors‚ and investors at large‚ with particular focus towards Enron’s ambiguous
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resist accountability is that if it appears as reducing remunerations‚ entitlements‚ or privileges‚ individuals will perhaps resist it. On the other hand‚ it’s most likely that people impartially want to maintain the status quo in order to keep their fraudulent activities undetected. An experience of resistance to change occurred during my volunteer work as the executive director of a certain foundation (name withheld) in Nairobi. The foundation was an indigenous organization supporting the education of
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Enron (2001)‚ and Tyco (2002) were all caught in the unethical practice of generating fictitious financial statements. All these companies did this buy using fraudulent accounting entries. Assets were inflated‚ sales numbers were inflated and huge debts were omitted from balance sheets. Another company that used accounting to put out fraudulent financial statements was Worldcom. Being the largest accounting scandal in American History at the time of its exposure‚ the Worldcom scandal cost 30‚000 workers
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society there will be people that will do anything to succeed in life which includes breaking the law or even finding loop holes within laws. Now the Sarbanes-Oxley Act is a federal law to try and protect shareholders and the general public from fraudulent practices but in the end it is just a law and all laws can be broken. Some critics have pointed out the “Madoff scandal as a prime example of how the Sarbanes-Oxley Act has failed” (Fuller‚ 2009). But just because a system fails doesn ’t mean
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included the high turnover in the CFO position‚ and the rapid growth in net income. They also accepted explanations of whistle-blower accusations that might have revealed the fraud if followed up. 2. What procedures can auditors perform to detect fraudulent entries made during the consolidation process? Auditors should understand and test controls over the consolidation process just as they do over purchasing‚ sales‚ payroll‚ etc. SAS 99 requires specific procedures to ensure against management override
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world are Ponzi Schemes‚ Pyramid Schemes‚ and Chain Letters. Ponzi Schemes are named after Charles Ponzi. They are fraudulent investment plans in which one person takes people’ money as an “investment” and doesn’t necessarily tell them how their returns will be generated‚ meaning that people’s returns on investments could be generated by anything. Pyramid Schemes are also fraudulent investment plans. They are structured like a pyramid‚ starting with one initial recruiter who recruits someone and
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“In addition to a culture of anything goes accounting‚ Ebbers was strongly against producing a corporate code of ethics. According to the SEC report‚ Ebbers described efforts to produce a corporate ethics code as a colossal waste of time.”2 Fraudulent behavior at WorldCom was wide-spread because its culture established what is appropriate and expected behavior. Culture comes from what “top management says and how they behave‚ which establishes norms that filter down through the organization
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In the aftermath of corporate scandals and the passage of the Sarbanes-Oxley Act of 2002 (SOX)‚ the audit committee is vested with greater authority to oversee fi nancial reporting and the appropriation of assets. As a result‚ the audit committee is responsible for adequate supervision and reporting and for responding to: • fraud in a fi nancial statement audit; • actual‚ perceived or potential confl icts of interest; • anonymous tips and complaints; and • through interaction with general
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contact either the media or the authorities. Samarin’s best option is to do the latter. Ethical Issue Intensity Samarin should blow the whistle on his employer now because the ethical issue intensity has spiked. Unlike the company’s earlier fraudulent actions‚ the new evidence affects him in a very direct way‚ increasing how important and relevant this ethical issue is to him. Samarin thought to himself‚ “We’re not covered… If I had fallen and broke my neck while changing light bulbs… I would
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