Question

This topic is about accounting fraud. Please watch the video and write down your thgoughts and feelings less than 500 words. 

https://www.youtube.com/watch?v=-w6duQhWuVk

This is the link for the video. The name of the video is Enron: the smartest guys in the room(2005). 

Answer 1

Enron case

Ethical issues and ethical management models

Enron will certainly adopt unethical accounting practices to cover up debt liabilities and misled shareholders. Accounting standards have been changed to benefit Enron. In the Enron case, unethical leadership was also obvious. For example, CFO Fastow was charged with fraud, money laundering, and conspiracy activities. Enron auditor Arthur Anderson was also involved in fraudulent activities. Arthur Anderson destroyed the audit files. As a result, many participants from top management to auditors were found to be engaged in unethical behavior. This deceptive practice caused many shareholders to lose money and deceived the government's regulations on fair reporting.

In terms of ethical management, certain employees such as Sherron Watkins complained to CEO Skilling about unethical accounting practices, but top management did not take any measures to stop these behaviors. The CEO himself does not think he has done anything wrong. His practice shows that the senior management themselves are involved in unethical behavior. The model of ethical management adopted by the leadership is fake and only used to deceive stakeholders.

Enron's moral culture and trust

Enron's culture was good earlier, but with a new system to compare employee performance with the performance of others, asking employees to increase their limits can lead to misbehavior and lack of trust among employees. There is a complete loss of trust among employees. Many employees were fired for failing to achieve their goals, so they became insensitive to their responsibilities to the company’s stakeholders. Employees began to change their ethics to achieve success. They are not aware of the importance of ethical principles or their professional responsibilities. Senior managers provide a breeding ground for such unethical behavior.