Corporate Ethics Failure †A Critical Analysis Essay

Arthur Andersen, in 1913 formal a corporate entity that for decades leaved a bench mark for canvasing and consulting in the explanation attention. From the on restore Mr. Andersen worked to reach a foundation for his go with substitute of the principles of excellence in the technical and respectable aspects of his new segmenty. His ethical model think on Utilitarianism, the greatest amount of proper for the greatest amount of people. In the ripe 1940s after the fo to a lower place passed away, saucily appointed CEO, Senior Partner Leonard Spacek, bring forward exhibited his lead and commitment to ethical practices by helping to establish the Accounting Principles Board, their prinmary responsibilities beingness to set industry accounting and ethical standards. This is a direct reflection on the commitment Arthur Andersons executive staff tail on the go withs whimsy in performing their practice in an h iodinest and trustworthy manner. Spacek was so grand that former Federal Re coif chairman Paul Volker once refered to as Spaceks tenure as a period when Arther Andersen was the Gold Standard for the accounting industry. let out more how to write a searing depth psychology outlineThese standards built a reputation in the accounting confederacy which take to tremendous success. Honesty and faithfulness were trademarks of the compevery that concentrated on quality, leadership and developing its personnel to be experts in every aspect of the accounting industry . As the melodic line began to grow, Arthur Andersen eventually became a leader in the pecuniary industry, employing as much as 77,000 accounting professionals in 84 countries. A reflection on the numerous positive aspects of Arthur Andersen, its commitment to the many ethical principles it championed, twain in its hold up corporate structure and that of the accounting community. In this writers opinion, with such metrics in place, it is terrible that such a large entity c ould decamp and collapse. However, if one understands the importance of ethical bearing and the impact of lost trust, the analysis is non difficult. The problems encountered at Arthur Anderson were the result of inappropriate ethical behavior which resulted from compromises of their let ethical standards.These began as small issues for various clients that over date grew creating a slippery peddle from which Arthur Andersen could not recover. Corporate enterprises are funded by investors, stockholders and consumers. Likewise, their activities, both familiar and external, also affect investor, stockholder, stakeholder and consumer. each depend on the financial health and viability of the company to support their individual interests. The right of the SEC is to verify financial offbeat and permit a tool for which say-so investors and stock buyers can fairly forecast the risks involved as they decide which company their money should support.Auditors region the responsibi lity the cater analysis of the the financial condition man looking for errors in the bookkeeping/ accounting of the companys financial position. The attenders responsibility is to correct or repose any errors thus nixing a misleading view of the true financial strength of the company. If this view is compromised by providing or allowing false data to exist, the companys position is weakened, investors are led under false pretenses, placing their investments at risk. The SEC depends on a complete, thorough and truthful analysis from an auditor to verify the financial confines providing security for those desiring to invest or provide financial support.Arthur Andersens problems began precisely as mentioned earlier, when executives began to Be present unethically in a manner against the principles on which the company was founded. It is definitive to note that while Arthur Anderson employed effective melodic phrase ethics, the company flourished. As it began to compromise its integrity the long term consequences eventually to appear. The Enron collapse represents just one of many cases where mistakes were made and hidden. For Arther Andersen, in business almost 90 years, the destruction of Enron documents to prevent the SEC from gaining access to incriminating march shows how corrupt the accounting firm had become. time millions of dollars in revenue for Arthur Andersen were at stake, the viability of the company depended on the reputation it garnered. The demise of the company resulted from the dishonest tactics it employed to proceed in power. As of June , 2002, the company had determined off 7,000 employees, and lost more that 650 of its 2,300 public audit clients with the layoff of thousands pending. The slippery slope to extinction had begun. http//money.cnn.com/2002/06/13/news/andersen_verdict/In the article 12 Ethical Principles for blood Executives by the Josephson Institute, published on celestial latitude 17, 2010, stated that language es tablishing standards or rules describing the winsome of behavior an ethical person should and should not engage in, are ethical principles. more specifically they are specified as Honesty, Integrity, Promise keeping and Trusworthiness, Loyalty, Fairness, Concern for Others, rectitude Abiding, Commitment to Others, Leadership, Reputation, Morale and Accountability.http//josephsoninstitute.org/business/ intercommunicate/2010/12/12-ethical-principles-for-business-executives/ The founder, Arthur Andersen, embodied these principles to the point that he personally reimbursed a client for an accounting mistake made under his watch. trance a disclaimer on the part of Arthur Andersen guards against minor mistakes in the accounting audit/ review, it seems this created a gray area that was interpreted advantage of. Also, management should wee highly-developed a zero tolerance mechanism to adjudge an ethical culture sanctified to preventing inappropriate behavior. Policy should have man dated regularly documented training on business ethics, and the importance of its implementation as the auditing do work ensued. Any issues should have been to the client with rapprochement mandantory prior to an Audit Opinion being submitted.The indictment of Arthur Andersen and subsequent trial provided cogent evidence the Audit Opinion and review of Enrons balance sheet and financial statements were submitted with the intention to skew the true condition of the companys true fiscal condition, thus deceiving the shareholders, senesce of directors, potential investors and stakeholders. An overview of the measures in place to defense against inappropriate accounting behavior provide an insite to the items that were violated during Enron and Arthur Andersens quest to bilk investors share holders of millions. These safety measures included Generally authorized Accounting Principles (generally accepted accounting principles), Generally Accepted Auditing Standards (GAAS), educati ons on Auditing Standards (SAS), and all professional ethics. The use of GAAP by accountants is standard protocol. An accountant follows these principles as a matter of daily routine. fit in to several accounting schoolbooks, GAAP is identify as a dynamic set of both broad and specific guidelines that companies should follow when measuring and reporting the information in their financial statements.http//faculty.mckendree.edu/scholars/2004/stinson.htmThe article 7 Principles of admirable Business Ethics presents seven excess principles which complement ethical behavior. Those are Be trustful, keep and open mind, meet obligations, have clear documents, become community involved, maintain accounting control and be respectful. http//sbinformation.about.com/od/bestpractices/a/businessethics.htm In conclusion, legal psychoanalysts formulate the opinion that executives at Arthur Andersen and Enron did not set out to have a positive impact on the accounting industry or any industry.They set out to make as much money for themselves as quick as possible. They were willing to do any(prenominal) it took to make that money. These thoughtless acts and greed led both companies to an eventual downfall in bankruptcy. The subsequent prosecution of these firms has produced new controls which should serve to prevent this type of financial disaster. more or less notably the Sarbanes-Oxley Act which includes requiring companies to reevaluate its internal audit procedures and makes sure the accounting practices both meet or exceed the expectations of the auditors. http//faculty.mckendree.edu/scholars/2004/stinson.htmStatement Regarding Professional ConductThis assignment is my own work. Any assistance I authentic in its preparation is acknowledged at heart the assignment in accordance wth schoolman practice. If I used data, ideas, words, diagrams, pictures, or separate information from any source, I have assignd the source(s). I understand that copying text word for word from other sources without placing it in quotation marks is considered plagiarism and not acceptable even if I cite the source where the material was copied from. I manifest that this assignment was prepared specifically for this company and has not been submitted in whole or in part, to any other company at Walsh or elseware.