The company should have had management in place to ensure the integrity of the financial reports given to the board and an in house auditor to verify the accuracy of the reports given to the board of directors. If the accounting was to be outsourced to Arthur Anderson accounting firm, an in house audit department should have been put in place to establish a checks and balance system.
Code of Business Conduct rules should have been established as part of the Meany’s normal operating practices that would not allow the false reporting of any information or reports to the company or any other entity on the company’s behalf. A compliance department should have been In place to ensure all documents financial or any other company related report, directive or memos are In compliance with the records retention policy. Discuss whether Enron’s officers acted within the scope of their authority.
This really depends on which side of the coin you’re on. Looking at it from the officers’ point of view, they did what they needed to ensure a profitable outcome. This led them to being a fordable adversary in the business arena. The officer delivered what was expected of them profits. The other side of the coin, ethically, the scope of the authority is what is legal. The officers of Enron and Anderson accounting firm both exceeded their authority when they knowingly participated in the defrauding of the board of directors and stockholders.
Ignoring many of their own rules and regulations put in place to safeguard the company; many decisions were made with the knowledge of Its negative Impact on the company. Their moon practice of mark to market accounting allows them to assume profits today for future transactions. They also exceeded their authority by granting ownership allowed the company to hide losses. Describe the corporate culture at Enron.
Enron’s corporate culture best exemplified values of risk taking, aggressive growth and entrepreneurial creativity. These are all positive values. But these values were not balanced by genuine attention to corporate integrity and the creation of customer – and not Just shareholder – value. Because the Enron corporate culture as not well grounded, a single scorecard – maximized price per share of common stock – became its reason for being, and even its positive values.