Business ethics is an area of ethics that examines ethical rules and principles within a commercial perspective using cases such as: Accounting Irregularities at WorldCom and Arthur Andersen…No More: What Went Wrong? (Business Ethics 4th Ed: Cases 5 & 6 pg.101-109), both clearly present various moral and ethical problems that arise that are real life business scenarios as well as question the impact of certain ‘special’ duties/obligations that apply to particular individuals and employees who choose to engage in these activities in the organization leading to their downfall. The WorldCom case and scandal occurred because accountants as well as former CEO Bernie Ebbers and Scott Sullivan failed to live the virtues of accountancy as well as failed to adhere to the moral principles and ideals of their profession and further analysis reveals the ways in which these irregular accounting practices were carried out along with the consequences and charges laid by investigators such as conspiracy, fraud and many false claims regarding their accounts and profitability. The Arthur Andersen…No More: What Went Wrong? case is another scenario where a series of unethical accounting practices resulted in the firm’s decline and the role they played in the accounting fraud at Enron. The way in which these corrupt practices took place is an obvious indication of the culture of the organization and the moral standings of employees, close relationships which affected both the company and clients such as Enron. Understanding business ethics in these cases we used ethical decision making frameworks such as the Triple Font Theory, Double Effect as well as Formal and Material points. Case 5 & 6 History :Accounting Irregularities at WorldComBernard J. (Bernie) Ebbers from the beginning “was a man who believed in himself and his company” a statement which was best expressed by the way in which he performed duties to his company. WorldCom thus, became the second largest telecommunications company in the United States through the acquisition of over 70 companies by 2000. Experiencing explosive growth encouraged competition driving costs down from 19% to 0 in 2002 and declining $28 billion in debt. The board of directors then loaned Ebbers $366 million, to marginally pay off the debt to which investigators launched a probe into the loan which revealed ‘extraordinary accounting irregularities’ making profits before taxes and other charges to eventually be $11 billion higher than they actually were. They did this by: double counting revenue from a single customer, keep delinquent account even after they stopped paying as well as not closed dead accounts. Eventually some of the charges against former CEO Ebbers and CFO Scott Sullivan included: fraud, conspiracy, making false statements as a result of their unethical accounting practices. Arthur Andersen…No More: What Went Wrong?Arthur Andersen was once one of the leading auditing and consulting firms in the world yet, this case showed the deliberate attempt to destroy evidence of illegal accounting practices related to the highly investigated Enron incident. They did this by deleting thousands of email messages, other electronic files and shred thousands of documents. The relationship between Enron and Arthur Andersen was seen as a “cozy” one which made it easy to maintain the improper accounting practices by both parties. Through further analysis, it was not the first time Anderson encountered situations like Enron but also with Waste Management Inc. where shareholder lawsuits were settled which aided in the U.S Department of Justice to win a conviction against Andersen for obstruction of justice. Business Ethics 4th Ed: Cases 5 & 6 pg.101-109AnalysisUsing ethical frameworks as discussed in class such as Triple Font Theory, Double Effect as well as Formal and Material points we drew our analysis from the questions pertaining to both cases:CASE 5 :•What are the potential ethical implications of pursuing a...
Bibliography: usiness ethics 4th editionWikipedia.com
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