Enron - Ethical Dilemma

Ethical decision making: A dilemma

Ethical issues have greatly transformed in our lives since the great Enron, Xerox and other huge corporations proposed big profits showing earnings of billions of dollars and yet in reality facing bankruptcy. These corporations faced great trouble with the federals and state for manipulating financial statements. But not only corporations can be blamed on this, accounting firms were involved in this as much as the corporations were. With the business stand point, ethics comprises of principles and standards that guide behavior. Investors, traders, customers, and legal system determine whether a specific action is ethical or unethical. Ethical issue is a vast subject, but we will look at the niche areas of financial accounting and audit fraud where ethical dilemmas are encountered and how federal government has taken steps to ensure compliance and regulations regarding this matter.

Relations between accounting firms and their clients have to be independent, but often time’s independency is disregarded and profit, status and commission is given more weight. Executives are taking enormous amount of compensation while their company is facing difficulty in maintaining its operations. These all are examples of unethical and fraudulent conduct. There are numerous examples which can be taken into account where unethical behavior is at rise and compensation given to executives is way beyond their worth.

The fraud which I will present is about Enron. Enron was the biggest energy trading company which was once called a house of cards but most believe that house of card was just built over gasoline. It became a smoking mirror in few weeks from cash flows in billions of dollars to bankruptcy. The story is not about numbers and complicated transactions but in reality it is a story about executive making ethical or unethical decisions. Bankruptcy of Enron was a huge tragedy to American people and its industries which shook the...