Ethical Lessons Learned from Corporate Scandals Essay

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Ethical Lessons Learned from Corporate Scandals

Ethics is about behavior and in the face of dilemma; it is about doing
the right thing. Ideally, managerial leaders and their people will
act ethically as a result of their internalized virtuous core values.
The Enron scandal is the most significant corporate collapse in the
United States and it demonstrates the need for significant reforms in
accounting and corporate governance in the United States. It is also
a call for a close look at the ethical quality of the culture of
business generally and of business corporations (Lessons from the
Enron Scandal). The collapse of even the smallest of businesses
impacts many people, and therefore even the smallest business can
learn what
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For these reasons, corporate financial
accounts do not provide accurate or sufficient information to
corporate managers, investors, or regulators. This leads us to
recommend that the SEC allow each stock exchange to set the accounting
standards for all firms listed on that exchange and to promote the
development of industry-specific non-financial accounts to complement
the financial accounts (After Enron 53).

The most important lesson of the Enron collapse is that every link in
the audit chain including: the audit committee and the board, the
independent public auditor, the bankers and lawyers that aided and
abetted the misrepresentation of Enron’s financial condition, the
credit-rating agencies, and the Securities and Exchange Commission
failed to deter, detect, and correct the conditions that led to that
collapse. Although not a part of the formal audit chain, most of the
market specialists in Enron stock and the business press were also
late in recognizing Enron’s financial weakness (Corporate Aftershocks
12). Moreover, this is a characteristic pattern in many other
bankruptcies. This leads us to recommend that most of the audit
functions be assigned to the stock exchanges, the only institution
with the potential to capture the third-party benefits of a good
audit. Each stock exchange would set the disclosure rules for the
corporations…