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Summary of the bernie madoff fraud
Importance of ethics in a business
The fraud of the century : the case of Bernard Madoff
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In the wake of the Madoff Ponzi schemes, the SEC has stepped up investment regulation and fraud detection measures. Additionally, the Sarbanes-Oxley Act of 2002 (SOX) was passed as direct result of the Enron and WorldCom ethic violations. SOX has been characterized as "the most far reaching reforms of American business practices since the time of Franklin Delano Roosevelt” mandated a number of changes to improve financial disclosures from corporations and prevent accounting fraud. SOX also created the Public Company Accounting Oversight Board (PCAOB) to oversee the activities of the auditing profession. Had the PCAOB been in place perhaps Arthur Anderson would not have been so quick to turn a blind eye to Enron’s accounting irregulars. Benefits of Incorporating Ethics and Values Ethics is fast becoming an essential aspect of business in the modern world leading to a positive public opinion as well as investment, partnerships, employee retention, assets protection, productivity & team work. As discussed earlier, public opinion can make or break an organization. To grow, companies either need to sell enough products and services to realize a profit or get investors. Both requires a positive public image. A company builds their image by acting in accordance with their values, and from demonstrating appropriate values. Documenting, implementing and publicizing the company's values and/or mission statement allows the public, clients, investors, and employees to understand what the company stands for, that it takes business ethics seriously. Companies with strong reputations are also companies that tend to attract more investments. Creating partnerships are of great importance to businesses. A business can be made or broken on j... ... middle of paper ... ...trate on a daily basis. The percentage of workers who said they observed misconduct on the job fell to an all-time low of 41 percent in 2013, down from 45 percent two years ago and a record high of 55 percent six years ago. The decrease in misconduct may reflect workers’ tendency to take fewer risks during difficult economic times. Good corporate governance means being transparent with and responsive to stockholders while managing the company for long-term success. It is at its core a balancing act that starts at the top by insisting every facet of the organization be ran with the upmost integrity. When uncompromising integrity, honesty, and fairness are at the heart of an organization then ethics are of the upmost importance. According to Senator Alan K. Simpson, "If you have integrity, nothing else matters. If you don't have integrity, nothing else matters."
Throughout the past several years major corporate scandals have rocked the economy and hurt investor confidence. The largest bankruptcies in history have resulted from greedy executives that “cook the books” to gain the numbers they want. These scandals typically involve complex methods for misusing or misdirecting funds, overstating revenues, understating expenses, overstating the value of assets or underreporting of liabilities, sometimes with the cooperation of officials in other corporations (Medura 1-3). In response to the increasing number of scandals the US government amended the Sarbanes Oxley act of 2002 to mitigate these problems. Sarbanes Oxley has extensive regulations that hold the CEO and top executives responsible for the numbers they report but problems still occur. To ensure proper accounting standards have been used Sarbanes Oxley also requires that public companies be audited by accounting firms (Livingstone). The problem is that the accounting firms are also public companies that also have to look after their bottom line while still remaining objective with the corporations they audit. When an accounting firm is hired the company that hired them has the power in the relationship. When the company has the power they can bully the firm into doing what they tell them to do. The accounting firm then loses its objectivity and independence making their job ineffective and not accomplishing their goal of honest accounting (Gerard). Their have been 379 convictions of fraud to date, and 3 to 6 new cases opening per month. The problem has clearly not been solved (Ulinski).
The rise of Enron took ten years, and the fall only took twenty days. Enron’s fall cost its investors $35,948,344,993.501, and forced the government to intervene by passing the Sarbanes-Oxley Act (SOX) 2 in 2002. SOX was put in place as a safeguard against fraud by making executives personally responsible for any fraudulent activity, as well as making audits and financial checks more frequent and rigorous. As a result, SOX allows investors to feel more at ease, knowing that it is highly unlikely something like the Enron scandal will occur again. SOX is a protective act that is greatly beneficial to corporate America and to its investors.
Ethics is a principle or a moral value every business should have. The way a business runs keeping in mind how the workers are being treated, how its products affect people and whether or not it’s is sustainable in the environment falls under
Ethics in business is a highly important concept, as it can affect a company’s profits, salaries paid to employees and CEOs, and public opinion, among many other aspects of a business. Ethics can be enforced by company policies and guidelines, set a precedent when a company is faced with an important decision, and are also evolving thanks to new technology and situations that arise due to technology usage. Businesses have a duty to maintain their ethical responsibilities and also to help their employees enforce these responsibilities in and out of the workplace. However, ethics and the foundation for them are not always black and white. There are many different ethical theories, however Utilitarianism, Kant’s Deontological ethics, and Virtue ethics are three of the most well known theories in existence. Each theory is distinct in that it has a different quality used to determine ethicality and allows for a person to choose which system of ethics works best with both the situation and his or her personal ethical preferences.
When running a business ethics plays an important role in the success of the business. “Ethics is the study of those values that relate to our moral conduct, including questions of good and evil, right and wrong, and moral responsibility” (pg. 2). Every individual will have a different set of moral codes. Moral codes are shaped by your personality, environment and religion. In this scenario and throughout this paper you will come to understand how our moral code of ethics plays a role in our daily decisions.
In an organisation ethics are supposed to set standards as to what is the right thing to do in conduct and decision making however this is not always the case. Over the years different scandals have occurred which have shown that companies and in particular the people that run them are not at all ethical and only seek to maximize profits. Economical analysts throughout the years have suggested that the way to avoid such incidents is by either having a code of ethics along with ethics training or through strong ethical leadership.
Ethics shapes our attitudes towards the world, other people, and cultures and how we process right from wrong. I would love to believe that the world is made up of individuals that have a high level of integrity and pure ethical fibers; however, this is not the world in which we live in. Ethics or rather morals entail mechanisms that defend, systematize as well as recommended conceptions of right or wrong, good and bad. Interestingly, organizations have to develop ethical codes to ensure employees and employers understand the difference in doing right or wrong. It is no secret that ethics are an essential aspect of successfully running any organization or government, yet, countless corporations grow precipitously on unethical practices. Ethics
Ethics is an extremely relevant value in business and consulting. The presence of recognized ethics and/or ethical practices tends to diminish the need for informative or legal/contractual precautions in the formalization of relationships, for both of the parts involved in a negotiation.
Treviño, L. K., & Nelson, K. A. (2007). Managing business ethics: Straight talk about how to do it right Fourth ed., Retrieved on July 30, 2010 from www.ecampus.phoenix.edu
The ethical values of a business are very important factor for any organization’s success. Business decisions taken within an organization may be made by person or groups. Webster’s Collegiate Dictionary defines "ethics" as the "discipline dealing with what is good, and bad and with moral duty and obligation, a set of moral principles or value or a theory or system of moral values." Ethics assists individuals in deciding when an act is moral or immoral, right or wrong. Ethics can be grounded in natural law, religious tenets, parental and family influence, educational experiences, and life experiences, cultural and societal expectations. No matter the size of an organization, industry or level of their profitability, business ethics is the backbone of any organization success. (Retrieved from Webster’s Collegiate Dictionary). This assignment focusing on conflicting work ethics between in the
Business ethics are a set of moral rules that govern how a business operates, how people should be treated within an organization, and how business decisions are made. They are a crucial part of employment and in managing a sustainable business, mainly because of the serious consequences that can result from decisions made with a lack of regard to ethics. Even if you don’t believe that good ethics don’t contribute to profit levels, you should realize those poor ethics have a negative effect on your bottom line in the long-run. Every business in every industry has certain guidelines to which its employees must stick to, and regularly outline such aspects in employee handbooks.
Ethics are moral principles or values that govern the conduct of an individual or a group.It is not a burden to bear, but a prudent and effective guide which furthers life and success. Ethics are important not only in business but in academics and society as well because it is an essential part of the foundation on which a civilized society is built.
Through an organizational culture that focused on financial greed for self, illegal accounting practices, conflicts of interest partnerships, illegal business dealings, fraud, negligence, and massive corruption at all levels, the Enron scandal help to create new laws and regulations with stiff penalties if violated (Ferrell, et al, 2013). The federal government implemented the Sarbanes Oxley Act (SOX) (Ferrell, et al, 2013).
In the business world there are many fundamental aspects and situations that can lead to several issues. In order to find an optimal and professional solution, business decision makers need to apply moral and ethical standards. And it is at that moment in which business ethics perform its role. Business ethics, which is in charge of examine how companies and individuals should act in business situations, is very essential in order to reach a common agreement and to work within the laws of business and solve an arisen dilemma. Working of the hand of ethical business companies, employees, investors, directors, and even individual officers can be beneficiated and obtain most favorable outcomes.
Important Topics Regarding Business Ethics: Ethics prevail everywhere. It does not only exist in individuals but also in business, professionals, markets, social activity, etc. And among them, businesses belong to the skilful center of a civil society, and they have a promise in their communities to make them develop. Through essential business conduct, they contribute to essential capital of society that is trust and justice that makes good governance possible. Improving Business Performance by Ethics: In today’s world business ethics are being structured and implemented to address the issues faced everyday like legal, ethical, social responsibility etc.