A Review of Accounting Ethics Essay - 275 Words

A Review of Accounting Ethics (Essay Sample) Content: A review of accounting ethics(Name of student)(Name of professor)(Course tittle)(Date)IntroductionSeveral organizations have had to contend with the damages resulting from the commission of ethical breaches; a vice which has continued to gain prominence over the past couple of years resulting in the loss of millions of dollars. The concept of ethical breaches in accounting can be described as the misappropriation or misconduct in the management of financial data by a companyà ¢Ã¢â€š ¬s auditors, accountants or financial managers with far reaching internal and external implications CITATION Bro09 \l 1033 (Brooks Dunn, 2009). This paper seeks to discuss the accounting breaches that contributed to the eventual collapse of Enron, the appropriate course of action with reference to the code of ethics and eventually make recommendations to contain such breaches.A quick comparison of the business environment in this decade as compared to that during the past two decades re veals a considerable decline in the cases related to ethical breaches in business management CITATION Dus11 \l 1033 (Duska, Shay, Ragatz, 2011). This can be largely attributed to the increased surveillance, strict tax regimes and auditing regulations put in place to keep the sector in check. Such an environment hence facilitates the rooting of ethical behavior since there is little room for misconduct which is also punished severely.Billed as one of the most prominent ethical breach case in the history of business, a Securities Exchange Commission sanctioned investigation unearthed a series of unethical practices and accounting fraud at Enron Corporation. The ethical breaches in question which comprised of various activities such as acts of insider trading, bank fraud, among others had severe ripple effects on the company including the loss of investor confidence CITATION Bro09 \l 1033 (Brooks Dunn, 2009). The accounting breach perfected by the company was however their establis hment of several limited liability special purpose entities which would enable it divert its liabilities by keeping the out of the companyà ¢Ã¢â€š ¬s accounts hence enabling them to irregularly maintain high stock prices and credit rating. Poor ethical leadership can also be touted as the main reason for the failure to create an ethical environment within the company since most of them were later implicated in the companyà ¢Ã¢â€š ¬s fiasco.Various accounting guidelines including the overestimation of profits posted by the company especially between 1997 and 2000 to the tune of six hundred million dollars were violated. This move enabled the company depict an entirely different image in a bid to edge out competitors and attract more business CITATION Bro09 \l 1033 (Brooks Dunn, 2009). The second violation would be the irregular creation of over three thousand special purpose entities (SPEs) which the company used to hide its risks and liabilities from the balance sheet by the use of creative names. This also enabled the company to remain afloat in the midst of the risky bank transactions it was conducting.RecommendationsAs a CFO, crafting a code of conduct within the organization would be the first step towards ensuring that the breaches are contained. This move can be implemented by crafting a document which focuses on the little financial or accounting issues which transpire all the time. Behavior modeling would also be another way of eliminating accounting ethical breaches in an organization CITATION Cro08 \l 1033 (Cross Miller, 2008). Becoming a good role model would effectively instill the culture of discipline and ethi...