Preventing Fraud at Mogel's Inc.

Revisions for the 7th edition by Eric D. Yordy, The W. A. Franke College of Business

Absent or poorly written codes of conduct are the reason for unethical conduct in organizations. Just look at the recent outbreak of unethical events with Wells Fargo, Enron and Volkswagen (McLaverty & McKee, 2016). Companies and their upper management push for better profits and forget to create a strong ethical culture. Creating large incentives for employees and management for achieving lofty targets create an environment for people to act unethical to meet their numbers. In 2016, Wells Fargo associates opened over 1.4 million accounts without their customers even knowing about the account (Goldfarb, 2017).

There are lots of Unethical Actions that occur in a company. In September 2016, Wells Fargo was involved in a scandal that involved over 5,000 employees had made fake accounts and were eventually fired. There are 269,100 employees in the Wells Fargo organization, 2%, which is 5,300employees of the organization were let go. The Wells Fargo scandal had started in January of 2009 to September of 2016 and more fake accounts are still being made by Wells Fargo. There was so many employees involved in this scandal, therefore making it really bad for the company Wells Fargo. One of the reasons why the employees were fired from the scandal was because the people were feeling pressured to meet hard to reach performance goals. As the employees felt more anxiety, their ethical behavior became

The company expects a high-level integrity from all of its employees due to the nature of the business it’s in. Which is the financial industry? – JP Morgan Chase shares its code of conduct with its heritage and why it is important to set the highest ethical standards in all of the business. Moreover, the company sets a high standard for managers to supervise and properly channel any

Unfortunately, the creation of SOX and a code of ethics in no way guarantee’s that everyone will follow the rules; people will always find a way to circumvent the system or misrepresent the code’s intentions. Even the most robust ethics program needs constant oversight to remain effective. The pressure to increase profits and market share can lead executives to push the boundaries of ethical business behavior. Despite the passage of SOX, some of the largest and most well-established companies are currently crossing those boundaries.

Ethical leadership is vital for the success of any business; this case study illustrates that the lack of moral values and a healthy ethically incline corporate culture, can lead to scrupulous behavior from the CEO all the way down the company. Scrushy had a demanding and cunning personality, and it was easy for his to influence others in his business to go along with the fraud. Also, having Stanwick and Stanwick, (2013) an active board of directors does have a positive impact on the performance of the firm. Also, good corporate governance supports the ethical requirements established by the stakeholders. A moral leader must cultivate a real ethically driven organization, which has no tolerance for unethical behavior.

In fraud committed against organizations, the victim of fraud is the employee’s organization. In frauds committed on behalf of an organization, executives usually are involved in some type of financial statement fraud; typically, to make the company’s reported financial results appear better than they actually are. In this second case, the victims are investors in the company’s stock. A third way to classify frauds is via the use of the ACFE’s occupational fraud definition, “the use of one’s occupation for personnel enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets” (ACFE, 2010). The ACFE includes three major categories of occupational fraud: asset misappropriations involves the theft or misuse of the organization’s assets, corruption involves the wrongful use of influence in a business transaction in order to procure benefits contrary to their duty to their employer, and fraudulent financial statements involving falsification of an organization’s financial statements for personal gain.

In difficult financial times, companies face various moral issues to try to keep up with their competitors. Although these issues have a direct impact on employee decision making, businesses rarely address how employees should assess the ethics of their actions and incorporate ethics into their decisions. Often this can be alleviated by creating and maintaining a corporate culture with a focus on

We found that although a code of conduct, ethics hotline, and newsletter exist, none were consistently used, enforced, or reinforced by company employees or management. For example, upon joining the company, employees must sign a code of conduct; however, management has not made a sustained effort to implement or reinforce the code.

According to Johnson (2012) leaders are powerful role models, and policies will have a little effect if leaders do not follow the rules they set. In Enron case, corruption and ethical misconduct were deeply embedded in their business culture where profitability was more important than ethics. In this paper, I will address the factors that had led to the development of the culture of profit before principle at Enron. Also, I will create my personal code of ethics that will guide me in my professional and personal decision making and doing the right thing when faced with ethical challenges.

According to our text, “Ethics is the moral principles and standards that guide the behavior of an individual or group” (Bateman & Snell, 2013, p. 68). Mark Hurd’s behavior was unethical to his values, character, and morals. Therefore, there were consequences that were created, to keep the company’s “ethical climate” properly shaped (Bateman & Snell, 2013, p. 76). Thus, unethical corporate behavior may be the responsibility of an unethical individual, but it often reveals a company culture that is ethically lax (Bateman & Snell, 2013, p. 76). Overall, maintaining an ethical environment can be challenging, but it is important to assess the company’s morals—to ensure that their reputation will not be in

The movie “Glengarry Glen Ross” presented a series of ethical dilemmas that surround a group of salesmen working for a real estate company. The value of business ethics was clearly undermined and ignored in the movie as the salesmen find alternatives to keep their jobs. The movie is very effective in illustrating how unethical business practices can easily exist in the business world. Most of the time, unethical business practices remain strong in the business world because of the culture that exists within companies. In this film, the sudden demands from management forced employees to become irrational and commit unethical business practices. In fear of losing their jobs, employees were pressured to increase sales despite possible ethical

Today’s business world presents numerous ethical issues. In today’s world above board/moral ethics in organizations do not often materialize intuitively. Organization must strive to provide employees with a clear understanding of the overall company vision. This will aid employees in practicing the code of ethics, policies and procedures in the workplace. Companies must be unwavering in continuously delivering the uppermost ethics of provision in which customers, applicants and employees are entitled to under fair business practices. One major core value is to uphold responsible and fair business practices.

Every organization also has a profession responsibility to conduct business honestly and ethically. Our readings reported, “Experts estimated that U.S. companies lose about $600 billion a year from unethical and criminal behavior” Kinicki and Kreitner (2009). The organization could avoid having ethical issues by meeting the

A business can not work out without an account system, which includes internal. Internal controls are used by companies to make sure financial information is accurate and valid. Strong internal controls are signs of a financially healthy company and protect the company’s integrity. Strong internal controls can also increase a company’s profitability. There are several types of internal controls that companies used to protect themselves such as: Segregation of duties, asset purchases, supervisor review, internal audits and adequate documents and records. This paper will discuss several topics from a case study about And the Fraud