One of the most widespread laws that were passed after the 2001 financial corruption of Enron‚ along with several other scandals‚ such as WorldCom and Tyco caused the implementation of the Sarbanes-Oxley Act (SOX) of 2002. These corporations sent a financial shockwave throughout our country crashing the markets. As a result‚ the people were no longer confident in the financial markets and their work ethics. They wanted to understand how effective it would be upon its implementation. This paper will
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clients’ desire to maximize profits‚ particularly in the era of quarterly earnings reports. Andersen has been alleged to have been involved in the fraudulent accounting and auditing of Sunbeam Product Waste Management‚ Baptist Foundation of Arizona‚ WorldCom and Enron. On June 15‚ 2002‚ Andersen was convicted of obstruction of justice for shredding documents related to its audit of Enron‚ resulting in the Enron scandal. Nancy Temple (Andersen Legal Dept.) and David Duncan (Lead Partner for the Enron
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Worldcom appears to be an ethically challenge company. The ethical consideration involved in the company decision to loan executives’ money to cover margin calls on their purchases of shares of company stock is a clear case of conflict of interest. Conflict of interest is morally wrong and will cause harm to the stockholders and stakeholders and therefore be an injustice towards them. The main business ethical issue in the Worldcom case was the false reports and the idea that issues were held "secret"
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In his paper‚ Carson points out 4 main arguments that we can derive from the recent corporate scandals (e.g. Enron‚ WorldCom). The arguments pointed out revolve around the flaws and inadequacy in current business approaches such as the stakeholder theory‚ shareholder theory and incentives system in corporations currently. In my response paper‚ I will make use of ethical theories such as Kantian ethics‚ Utilitarianism‚ Rawl’s theory of justice etc. to analyse the arguments made in the paper and to
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The company I chose to analyze is WorldCom. This company based in Mississippi had recognized that for several years it has been bloating or increasing their earnings through booking about $3.8 billion expenses as long-term investments rather than operating costs. They did that by posting operating expenses such as salaries and wages as long-term investments on the balance sheet while those costs should have been expensed and posted to the income statement. When they did that‚ they overstated assets
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Why is it important for external auditors to be independent? Relate your answer to the primary role of external auditors? By Zachariah Godfrey-Plews This essay has asked me to look at the importance of external auditors and why it is vital for them to remain independent. I will try and look at the many ways of the advantages of independent auditing from different perspectives for example the company itself‚ the general public and the state. I think it is important to first define what an audit
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merging due to the industry consolidation‚ therefore forcing MCI to keep up with its competition. MCI was acquired after a bidding war between WorldCom‚ British Telecom and GTE‚ with the winning bid being a $37 billion offer from WorldCom. MCI-WorldCom then acquired many other communication companies excluding Sprint due to a U.S. Justice Department ruling. WorldCom operated throughout its filing of bankruptcy‚ resulting with MCI being not only the surviving company‚ but one of the most extensive networks
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risk arbs take in this deal? How would their positions change if the Board appeared to favour the Qwest offer? 4. Consider the WorldCom-MCI merger and the Qwest-US West merger? Trying to avoid hindsight bias‚ should the boards of MCI and US West have accepted these offers? What is the obligation to shareholders? Was that obligation fulfilled? What about WorldCom and Qwest? Did their shareholders benefit? 5. What offer should MCI accept? 6. What approach should Verizon take to win the
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they had destroyed a number documents concerning its audit on Enron which had filed bankruptcy in late 2001. The destroyed documents had led to an indictment for obstruction of justice on March 14‚ 2004. Further scandals surfaced and this time is WorldCom where they blame Andersen for failing to find the accounting irregularities however Andersen blame for the scandal insisting that the expense irregularities had not been
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/ Andersen and the WorldCom scandal. Both of these companies were involved in unethical accounting practices. While Enron was accused of a vast number of shady dealings that included concealing debts in order keep them from being reflected on the company’s accounts‚ WorldCom’s accounting practices were so fraudulent that the company was led into the largest bankruptcy in history. Unethical accounting practices and scandals of the caliber of the Enron / Andersen and the WorldCom scandals is what led
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