Knowing Your Audience Essay

801 Words Jul 1st, 2011 4 Pages
Ethics in Accounting and Financial Decision Making Laseda Dickson
June 1, 2009
Ric Franchetti

America is aware of the familiar financial collapse of Adelphia Communications Corp., Tyco International Ltd., Global Crossing, and of course the Enron Corp are just a few of the failed amidst allegations of financial mismanagement, poor decisions, and a lack of oversight. The reality is that the aspects of financial collapse begin with a severe erosion and eventual ruination of corporate and personal ethics. In short the companies collapsed ethically long before suffering financial ruins.
In response to the magnitude of the collapse, as well as the sheer number of companies affected, the U.S. Congress passed the
…show more content…
The parts, however, were worth only $2 million. The worth of the parts was irrelevant because the parties agreed to back out of the transaction in January had been released. Now get this The external auditor was aware of the transaction’s tentative nature, but did not disclose it, because the amount involved was not material in terms of Sunbeam’s total sales. Although the amount was material with re-guard to the financial condition of the company as well as the intent and integrity of management.
There were two problems that caused the scandal for most of these companies and they were the auditors because they were also performing consultant work for the same companies I would call that a big conflict of interest. According to USA Today, in 2002, American Power Conversion, for example had a 5-1 ratio of non-audit fees to audit fees. Apple Computer’s non-audit-to-audit ratio was 12-to-6. The year before Enron’s problems came to the light, they paid former accounting firm Andersen $52 million: $27 million for its non-audit work and $25 million for its audit work, which included tax and consulting services. Let’s stay with Enron for while longer. The employees at Enron were not

Related Documents