Essay Example on Encouragement of ethical conduct within an Organization

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The most important aspect to having a successful workplace is to have a steady foundation for good business practices Encouragement of ethical conduct within an organization is of high importance in terms of following the law and a foundation os being an ethical company although many businesses know what is right from wrong some may still bend the rule because one time to them would not make a difference however this specific mindset will eventually become a continuous unethical behavior the sarbanes oxley act of 2002 was established because of the unethical doings of companies such as tyco enron and worldcom The act was passed by US Congress in 2002 in response to accounting frauds arthur anderson one of the largest accounting firms was caught up in the frauds The companies were destroying documents charged criminally and they ended up going out of business because of this unethical fiasco 



The Sarbanes Oxley Act established new rules for publicly traded companies and audit firms this act has led to the reform of the accounting industry practices and it shows how ethical conduct is important in business not only for the sake of the business but for the benefit of our society as a whole The sarbane oxley act reinforces the basic notion that if an unethical action is also made to be illegal there is less of a chance that unethical decision will be followed through with in the first place the act forces companies to become more transparent in their financial reporting practices so the public are more aware of what the company is doing financially Prior to sarbane oxley the accounting industry was largely left to regulate itself so it became clear that leaving accounting standards open to interpretation it became harmful to shareholders and the unethical dilemmas became a public concern the act was key in establishing a positive perspective of whistleblowers while giving them a legal incentive to come forward when one is aware of any unethical federal offense this act also protects whistleblowers like Sherron Watkins Watkins was the former Vice President of Enron who assisted in exposing Enron's unethical financial practices by bringing attention to its bad accounting practices from watkin s perspective she just warned the corporations chairman of the company's wrongdoing and how 



it needed to stop immediately before it got worse and of course the company as a whole did not take her warning seriously this shows that government intervention in the regulation of accounting practices is needed the sarbanes oxley act not only intercepts any future unethical dilemmas by firms but also discourages CEOs to not take unethical practices lightly with this act in place investors can see what goes behind the scenes while the company is working transparently the company was able to hide billions of dollars in debt from failed deals the CFO and other employees of the company not only missed the Board of Directors and Audit Committee on high risk accounting practices but also pressured the CEO to ignore the issues Once shareholders found out about the dishonesty from this scandal they filed a 40 billion dollar lawsuit against Enron Because of this the company's stock plummeted immediately as a result other Houston competitors offered to purchase the company at a very low price and the SEC began to investigate more into their unethical actions in october 2001 the enron scandal was publicized and led to the Enron s Corporation s bankruptcy The Enron corporation was an American energy company based in Houston Texas and was ruined by one of the largest audit and accountancy partnerships because of this unethical situation enron is known as one of the biggest audit failures from the 1900s to 2000s there was the big eight accounting firms which included Arthur Andersen that was caught and was held accountable for multiple lawsuits 



The big eight accounting firms were Ernst Whinney Arthur Andersen Deloitte Haskins and sells Price waterhouse Touche ross arthur young coopers lybrand and peat mar wick mitchell they all eventually merged by pairs except arthur andersen today we have the big 4 accounting firms there are a few morally and ethical questions that should be considered that the court case did not cover Questions such as were the executives making moral decisions who is to blame for all this unethical dilemma the company culture the individual's moral values or the system the organization had already set up first and foremost it was known that they hired individuals whose main focus was on making money and the survival of the richest type of mentality It also didn't help that the company encouraged employees to break the law and lie as this was encouraged it created a wild risk taking environment that was taken to an extremely dangerous level of these individual s morals and values which were clearly blinded with how much money they were able to steal the unhealthy company culture was led by the corporate governance and the immoral decisions also caused selfish acts like blackouts the blackouts were incentivized by Ken Lay and Jeff Skilling they collaborated with Arthur Andersen and they went with the immoral behavior and validated all the books and records Enron had Andersen was later charged with obstruction of justice for destroying Enron s most criminalizing documents as seen the corporate governance of the company was certainly corrupt which led to their infamous downfall



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