GEORGETOWN XLIST FREE

In most cases, shareholders and investors depend on the financial statements available to make educated and informed decisions. Financial reporting is the representation of all information about a company's historical, current and projected health. Shareholders must feel confident enough to trust a company with their money. In financial reporting, ethics assumes a key role. Sarbanes-Oxley Compliance.' (2005) Technet.

GEORGETOWN XLIST FREE

('Sarbanes-Oxley Compliance,' Technet 2005) Although the act is not a panacea, increased objectivity on the part of auditors and greater insistence on free and fair disclosure on the part of firms will hopefully ameliorate the some of the hiding of vital information that created the climate of secrecy within the firms of Enron and orldCom that helped give rise to the 2002 scandals. Additionally, it mandates the certification of internal audit work by external auditors and mandates increased disclosure regarding executive compensation, insider trading and financial statements, in the interest of making more information public to investors. Also, it mandates auditor independence from the interests of the firm, meaning that accountants cannot have a financial interest in the success or failure of the firm. Sarbanes-Oxley stipulates criminal and civil penalties for securities violations. Corporate executives are now being required to be…

This loss of investor confidence has lead to significant changes in accounting standards and auditing practices. The increased skepticism about accounting practices has forced many multi-national corporations all over the world to defend their financial statements. All this contributed to a decline in the strength of the American economy, and certainly also had global repercussions. Investors have questioned the accounting practices of many other firms there has been significant fallout on the financial market and considerable negative consequences in the market, the economy, the investment paradigm, and public confidence. In the wake of the Enron scandal many questions have arisen centering on the strength of the U.S. One can not begin to trace the various lines and connections of the myriad of relationships, but the chart does fulfill the purpose of showing how much of a web this situation involved. Rule 133 contains more than 800 pages, which further complicates its adoption and consistent interpretation by various companies. 133, 'Accounting for Derivative Instruments and Hedging Activities' was developed by the Financial Accounting Standards oard (FAS), an independent agency that sets guidelines for corporate auditors. Graham, wife of Texas senator Phil Graham, made this ruling 5 weeks before resigning as chairwoman of the CFTC and joining the Enron oard of Directors in 1993.ĭerivative accounting is further complicated because there is no consistent way to fairly report their value and risk in a company's financial report.

Due in part to a ruling by the Commodity Futures Trading Commission's (CFTC) chairwoman, Wendy Graham, derivatives remained free of regulatory oversight. Retrieved March 27, 2009…Įnron could engage in their derivative trading strategy with no fear of government intervention because derivative trading was specifically exempted from government regulation. The company may have suffered in the short-term but would have been able to survive in the long-term. Had the data been presented factually and honestly, the analysis that flowed from it would have benefited Enron's internal and external stakeholders. ide-ranging and catastrophic losses resulted from this misuse. Data was manipulated and/or hidden from those whose job was to analyze the data.

The Enron scandal is perhaps the most egregious misuse of data in recent years. From a consequentialist perspective, their actions resulted in significant financial losses for millions of people, job losses for thousands and a loss of public faith in the financial system. From a deontological perspective, they broke laws. Ethically, the actions of Enron management were reprehensible.

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