Ethics and Corporate Responsibility: Accounting Fraud

Ethics and bodily Responsibility Accounting FraudThe key issued described in the case against bolt Corporation is that waste had overstated its tax incomes during the past four geezerhood by almost $2 billion. The blindulent scheme had mis lead investors roughly sterilize makes gain to polish its reputation on W in all Street and to boost the callers pack price.These report malingerer cases show us that ethics is a historical issue, a very current issue and it is one that unavoidablenesss to be addressed. Unhonorable behaviour is common and terra firmas exist for such behaviour. Recent score s sessdals involving high-profile companies such as bolt out Corp rent cal guide into question accounting practices and undermined originati all concern confidence in the profession. These ethical s fuckingdals in the real universe of discourse suggested a foodstuff economy being out of control and raise demands for more stringent and effective government regulation. S uch deception by circumspection hampers the ability of the users of financial statements from gaining accurate business information for decision-making and leaves their interests unprotected.2.CASE give-and- inducea)What ar the ethical issues looked in these cases?The term ethics refer to a system or code of bearing based on solid duties and obligation that indicate how we should behave it deals with the ability to distinguish right from misemploy and the commitment to do what is right. Unethical behaviour in the incarnate innovation is political and business s advisedals, which arise with the disclosure of misdeeds by trusted executives of prodigious public corporations. Such misdeeds typically involve complex methods for mis exploitation or misdirecting funds, overstating revenues, understating disbursals, overstating the pass judgment of corporate as nail downs or under account the existence of liabilities, sometimes with the cooperation of officials in other corpor ations or affiliates.For Xerox Corp. it has been snatching investors since 1997 till 2000. In a scheme directed and approved by its precedential arguement, Xerox falsely portrayed itself as a business meeting its competitive challenges and increase its clams every quarter. Xerox k instantlyingly or recklessly increased revenues and earnings by accelerating the fruition of revenues by means of mostly non-GAAP accounting actions, overstated its earnings by using so called cookie jar reserves and interest income from tax refunds, clothed loans as asset exchanges and manipulated its accounting in violation of principally accepted accounting principles (GAAP). All of them should have been disclosed to investors in a timely manner be buzz off, singly and collectively, they constituted a significant issue from Xeroxs past accounting practices and misled investors close the quality of the earnings being reported. to a fault that, major(postnominal) Xerox management reaped over $5 billion in performance-based compensation and over $30 gazillion in profits from the sale of stock.The practices summarized above constitute an unlawful scheme by Xerox to defraud investors through undisclosed accounting practices and other material transactions, some of which the play along knew or should have kn check violated GAAP. Xerox failed to tell investors that these actions were the reason Xerox met or exceeded consensus earnings estimates quarter after quarter.b) The possible reasons or factors that whitethorn cause the unethical actions in the cases.The ethical issues faced by Xerox corp can be explained from a soulfulnessal, organizational and taxonomical train and it possible reasons why they commit unethical actions.Personal fool away contingent reasons Individual moral failures and greedPersonal level calls for the instance evaluation of the main individuals that participated in the various fraud as for Xerox Corp Former Chairman and CEO, Paul Allaire, Fo rmer Chief financial Officer, Barry Romeril and KPMG partner, Michael Conway, in a statementreported that they be the main person whom in charged by the SEC way back years of1999. The values and ethical behaviours of these individuals have continuously been calledinto question. M each of the charges directed towards these individuals ar a overhear indicationof acquiring personal interest.It is not that the senior executives did not receive any ethics training earlier on but it is their own individual moral failures and greed that led to the aberration of financial statements. They did not consider the neighborly implications of their unscrupulous decision on their company and also all parties with interests in the company. What concern these executives be their own individualized interests especially in wealth maximization.Organizational LevelPossible reasons The need to follow gear ups from bosses and pressure from topmanagement on their accountants to defy the numbers ad d up.An unethical practices by the Top management to determine that the accountant of theCorporation to make up the financial statement reporting to reflect the corporation financialposition was on a good position no matter what it cost as long as they can manipulate thetreatment of accounting practices.This might be the reasons for the accountant in that organizational tied up( unable toperform as an individual parties) with the mislead accounting practices in order to followthe command of the banner management.As in Nicor Energys overstated unbilled revenue by approximately $4.5 million for 2001was a collusion among Johnson (senior-most financial officer) and Stoffer (NEsPresident CEO) in inflating the unbilled revenue number.Stoffer also directed a reversal of a portion of the incurred expense of 2001 into 2002to meet year- finish up earnings targets.Besides that, Johnson who was responsible for setting the level of the naughtily debt reservewas under pressured by Stoffer t o purposely understate the bad debts reserve.Systematic LevelPossible Reasons Cosy relationship the firms have with their corporate clientsand Enormous pressure from Wall Street investors to keep up condensed term earnings.As been spell out, many out-of-door factors have contributed to the confront of this unethicalissues. Such possible factors from the external forces be Corporations often hire accountants and other personnel from their auditor and accountants and much of the pressure brought to bear on accountants stems from the cosy relationships the firms have with corporate clients.As for Xeroxs auditors, KPMG kept silent when it prep atomic number 18 out around the accounting discrepancies in Xerox so that they can maintain their relationship and businesses with Xerox.There was no watchdog ( legal and structure) at Xerox. KPMGs bark sounded no warning to investors its bite was toothless.Beside the possible causes that might led them to commit in these unethical actions possiblymight be collectible to the investment climate of 1990s added insults to injuries. Cited back, yearof 1990s, Companies that failed to meet Wall Streets earnings estimates by even a pennyoften were punished by significant declines in stock price. In addition, compensation ofXerox senior management team depended significantly on their ability to meet increasingrevenue and earning target.c).Who were the stakeholders (individual or sorts) that argon affected by the unethicalactions? How are they affected by the fraud or unethical actions?Stakeholders are those groups who can affect or are affected by the achievement of the firms objectives. Stakeholders in a company may include shareholders, directors, management, suppliers, government, employees and also the community. The unethical actions in Xerox Corp have affected the stakeholders in a way or so.ShareholdersShareholders are invariably the first victims of top management fraud. When news of fraud by a firm becomes public acquaintance, it immediately reduces the stock market value of the companies involved. Bondholders and other creditors of the firm can also end up bearing the negative effects of management fraud.After news of the financial fraud at Xerox Corp. is released, Xeroxs stock has been declining sharply and is now craft at about $7. Shareholders can no longer assume that management is acting within the law or with their best interests in legal opinion. Shareholders now require greater openness on the part of their senior managers. orderlinessFraud also depresses the overall moral climate in a society. It can lead to a general lack of faith in the integrity of senior managers, erosion in the confidence in the allow market system, including its political institutions, processes, and leaders, and a general growth of cynicism in a society. The failure of accounting firms to detect managerial fraud has also led to less faith in audited financial statements. Worse still, many cogitate that the accounting firms have compromised their own integrity because of the lure of lucrative consulting contracts from firms they were auditing. In Xeroxs case, their auditor, KPMG complied with management at Xerox to allow the accounting ir incessantities to continue.EmployeesEmployees of companies whose top managers study in fraud often are hit the hardest, even when they are unaware of their executives illegal activities. Fraud can cause employees to lose their jobs, their retirement savings (which often are tied up in company stock) and their reputations. Frequently, the very fact that employees have worked for a fraudulent company taints their resumes to the menstruation that some find it difficult to find jobs elsewhere. The negative impact of Xeroxs fraud was that Xerox has laid off thousand of workers in the past cardinal years and may make further retrenchments in the future.d) Discussion on the governance and control issues arising from the companiesexperienced.The highl y visible accounting scandal in Xerox Corp showed us one significant matter the corporate governance and internal controls is failed in the corporations. The worst incidences of fraud are normally committed by insiders, among whom those executives figure prominently who are assigned to manage and control their organizations. Corporations are now looking at how they can make their respective boards of directors more effective. Xerox Corp, has made a good march on on corporate governance and control issues arising from the companys experience.They have adopted inexorable new guidelines on what constitutes director independence. Applying this definition, 75% of their directors are independent.Proactively integrated Sarbanes-Oxley moment and proposed NYSE rules into their governance processes.Revised and strengthened the charters for their Board of Directors committees.Hold regular executive sessions of outside directors without Xerox management present.Launched a massive suit to st rengthen internal controls, train their people and promulgate a clear and strong Code of Conduct.Established an Ethics Help line for their employees and have taken other measures all aimed at making Xerox a role model in ethical behaviour.Bear in reason that, no laws or policies bequeath ever be sufficient to end all corporate misbehaviour. We are confident, however, that truly independent and inquisitive boards of directors will provide the best safeguard against corporate wrongdoings. such Audit Committees moldiness be autonomous and vigorous, Financial Information is inherently judgmental ,give Sarbanes-Oxley a chance to work, excessive executive compensation can be tamed by the Compensation Committee and directors must be selected and appraised by unaffiliated Nominating Committee.3.ConclusionFraud had damages the reputations of the individuals and firms involved. Revelations of top management fraud have caused the public to question the ability of boards of directors to mon itor senior executives and protect shareholders wealth. As for Xerox Corp, in order too besmirch the harm caused by the unethical actions by the executives, firstly Law and regulations are, and will remain, the most influential external drivers of corporate ethics, but legislation is no substitute for the presence of leaders who support and model ethical behaviour. The single most important ethical leadership behaviour is retentivity promise, followed by encouraging open communication, keeping employees informed and supporting employees who uphold ethical standards. Corporate leaders need to communicate ethical values throughout the organization, but they must do more than talk the talk in order to establish and sustain an ethical culture. As for specific programs and practices, a corporate code of conduct is viewed as being most important to prevent or minimize accounting frauds. Such a code must reflect and honour the values and principles of an organization. Besides that, ethi cs training for all members of the organization, corporate social responsibility programs, ombudsman services and help lines can be done to assault unethical behaviour. In summary, employees need to have a code to set the ethics foundation, training to help people truly understand it, and programs that earmark them to inquire about and report ethical violations. A comprehensive Whistleblowers carry to provide wide-ranging protection for whistleblowers in all sectors too can help encourage whistle blowing.Study Of acquaintance Empiricists Vs RationalistsStudy Of Knowledge Empiricists Vs RationalistsThe dispute between empiricism and rationalism begins within epistemology, the study of companionship. Epistemology attempts to process the questions what is knowledge?, what can we know?, and what is the difference between opinion an knowledge? The study of knowledge began in Greece with the Pre-Socratic thinkers, as far back as the sixth and fifth centuries B.C.E. Zeno, a Pre-Soc ratic, is the first thinker to bring about the two schools of philosophical system, rationalism and empiricism, which would grow to become a popular centralize among other philosophers. Rationalism is defined as the epistemological view that authentic knowledge is derived from reason and from within the mind. This school of thought is based off of the a priori truths that can be known independently of observations, and innate thinkers subjects believed to be present from birth. Empiricism, on the other hand, is the view that true knowledge is derived from disposition experience. Empiricists believed that a priori and innate images were none existent, and rather all significant knowledge came from the a posteriori, the belief that truth is established just through observation. Zeno chose to taper on information derived from mathematics or rationalism, because he believed this information to be plastered. He thought that information derived from the wizs, or empiricism, co uld be deceiving. From there, the way by which we obtain knowledge continued to be argued over. During the seventeenth and eighteenth centuries, philosophers began to take sides as to what they believed was the source of knowledge. They formed two groups the Continental rationalists and the British empiricists.In the Continental rationalist group were philosophers Rene Descartes and Baruch Spinoza. The philosophies of Descartes and Spinoza are similar because they are systematic, logical, and rational. Both Descartes and Spinoza sought a system of thought that feature the certainty of mathematics and was free of Scholastic tradition, because they believed scholasticism could not be trusted. They thought that judgments must be made from a numeric theme and believed in a mechanistic worldview, the real world is not the world as known by the senses but rather by mathematical physics. They were also both pantheists, which meant that they equated idol with nature. Spinoza worked off of Descartes ideas from his Cartesian Method, that cryptograph is true unless it is clear and distinct. This idea of only believing what is certain was an idea brought up years ago by the Pre-Socratic thinker, Zeno and developed further by the Continental rationalists. The biggest difference, however in Spinozas philosophy was his opinion on bone marrows. Descartes defined eye as that which can exist by itself, without the aid of any other totality. He divided the world into two kinds of substances, thinking substance (the mind) and extended substance (the consistency). He then divided thinking substance into the in mortal thinking substance (God) and bounded thinking substances. Although Descartes believed that there was only one infinite substance (God), he believed that there were many finite thinking substances, so he was a pluralist. Spinoza rejected Descartess divisions of substances and his throng of finite substances. He did not agree with Descartess division of infi nite and finite thinking substance. For Spinoza, there was only infinite substance, and no thinking substance and extended substance. Spinoza carryed that there was only one substance, infinite substance, which he equated with God. Spinoza also argued that the definition of substance makes it impossible for the mind and the body to be distinct substances. He said that mind and body are modes of that single substance. So, Spinoza took Descartes idea of substances and built upon it, but Spinoza was a monist rather than a dualist like Descartes.The other major philosophical group during the seventeenth and eighteenth century was the classical British empiricists. The empiricists believed that all knowledge is derived from observation. Hume and other British empiricists rejected the intuition/deduction thesis and the idea of innate knowledge proposed by Descartes. Hume believed that true knowledge came from a posteriori, sense experience, rather than from a priori. A major difference b etween Hume and Descartes is their take on the issue of Gods existence. When the two applied their very different theories to the outcome of Gods existence, they arrived at different inferences. In Descartes efforts to doubt everything, he realized that only one thing was certain, I think, therefore I exist. Descartes concluded that God exists when he realized that if he himself is subject to doubt, he is im unadulterated, and cannot be the cause of his existence. Because he had an idea of perfectness, this idea must come from a perfect being, or God. However, Hume was not able to prove Gods existence. Hume built upon Leibnizs analytic man-made distinction in creating his Humean Method. He separated ideas into three categories analytic propositions, semisynthetic propositions, and nonsense. He created a set of questions that one could ask to come to the mop up as to what kinfolk an idea fell under. In contrast to Descartes conclusions about Gods existence, the Humean method su ggests that God should be placed under the nonsense category because it is not possible to trace God back to sense data. Descartes, the rationalist and Hume, the empiricist had differing opinions. However, the two philosophers are similar because they both raise very skeptical issues. Descartes idea of the possibility of an evil demon putting thoughts in our heads and Humes conclusion that the idea of God is nonsense caused people to begin questioning traditional teachings and what they had always thought to be true. New ideas like the ones presented by Descartes and Hume afterwards caused problems because as people became more aware of these ideas, more rebellion from representation and religion began to occur.Part Two Immanuel KantIn the Preface to the second var. of the Critique of Pure Reason, Immanuel Kant compares his philosophy to the Copernican Revolution. It is said that as Copernicus believed that all heavenly bodies moved round the sun, Kant believed he was the center , and that everything moved around his philosophy. The philosophy of Immanuel Kant was so revolutionary because he brought together rationalism and empiricism. Because of Kant, the debate between rationalists and empiricists ended, and epistemology could move forward.Kant was inspired to build his philosophy after he encountered a copy of Humes Inquiry. He realized that he disagreed with many of the issues Hume brought up, and decided to contradict them. In his book, The Critique of Pure Reason, he combined the ideas of Hume and the ideas of rationalists. Kant agreed with the empiricist claim that sense experience is the source of all beliefs, but disagreed with the conclusion that those beliefs may not necessarily be true. He also disagreed with the rationalist idea that truths about what does or does not exist could be decided through reason alone. He eliminated the debate by claiming that thinking and experiencing cannot let us know how things really are. Instead, Kant asked if it was possible that we have metaphysical knowledge. He claimed that the mind analyzes the data it perceives in terms of space and time. So, space and time are not features of external reality, as the empiricists and rationalists before him believed.Kant said that in order for human beings to interpret the world the human mind imposed certain structures on the incoming sense data. Kant defined these structures in terms of 12 categories substance, cause/effect, reciprocity, necessity, possibility, existence, totality, unity, plurality, limitation, reality and negation. These categories were characteristics of the appearance of any object in general. However, these categories are related only to human language. When making a statement about an object, that person is making a judgment. A general object, that is, every object, has attributes that are contained in Kants list of Categories. In a judgment, or verbal statement, the Categories are the predicates that can be asserted of ever y object and all objects.