MicroStrategy Ethic Case Study

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MicroStrategy Scandal Ethics Research Project Graduate Student Management Accounting and Business Problem Solving Overview In March of 2000, MicroStrategy was the subject of an investigation alleging the backdating of contracts and accounting fraud. Executives CEO Michael Saylor, COO Sanju Bansal, and CFO Mark Lynch each paid personal fines of $350,000 and were also ordered to disgorge the combined amount of $10 million in a settlement with the SEC. (Burns, 2012) Contracts were backdated, revenues inflated, reports in which the verifier knew of their inaccuracies were signed and published to the public and as a result stock prices soared and plummeted in the wake of these transgressions.…show more content…
He was given the option to reapply after the three years. (SEC, 2000) Ethical Issues It is important to have at least a good understanding of what we are talking about in regards to not only ethics in general but ethics in business and for accounting specifically, as this case is focused primarily on accounting practices. The American Institute of Certified Public Accountants or AICPA had developed five divisions of ethical principles that its members were expected to follow. Those principles are “independence, integrity, and objectivity”, “competence and technical standards”, “responsibilities to clients”, “responsibilities to colleagues”, and “other responsibilities and practices” (Sellers, 1981). And even after the recent onslaught of scandals, some of the responsibilities of regulation in public companies have been transferred from them to the government in order to create the Public Accounting Oversight Board or PCAOB, the AICPA does retain a good deal of authority in this area. Accountants and their practices have traditionally been held to very high standards. The most recent publication of the AICPA’s Code of Professional Conduct defines a key position as, “…a position in which an individual…has the ability to exercise influence over the contents of the financial statements, including when the individual is a member of the board of

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