Essay on accounting ethics

Submitted By saikatjuthi
Words: 1855
Pages: 8

This is a 6-page essay discussing ethics and governance in business. It identifies one specific organization and critically evaluates its performance in relation to the key principles of business ethics. It provides background information about the organization, information about ethical dilemmas within the organization and possible ways these dilemmas can be solved. It relies on 15 sources and is presented in Harvard format.
Enron and Ethics
Enron is an American company based in Houston, Texas. Before declaring bankruptcy in 2001, Enron employed approximately 22,000 people and was one of the world's leading natural gas, electricity, pulp and paper and communications companies. It had reported revenue of $111 billion in 2000. However, due to accounting fraud, Enron is now considered a company that lacks ethics and stands for corruption (Enron, 1).
Ethical Dilemmas within Enron
Deontological Ethics
The media coverage of the Enron scandal revealed a major breach of ethics due to accounting fraud. The specific actions caused an ethical problem within the company. The news coverage detailed the consequences of the actions of those involved in ethically questionable behavior, but according to the deontological ethics theory, it is the actions of those individuals that need to be examined (Fisher & Lovell, 1). Ethically wise decisions are those that increase the good of the company (Stanford Encyclopedia of Philosophy, 1). In the short term, those involved in faulty accounting practices benefited monetarily from their poor choices. In the long term, those same individuals face prison time, which didn't end up serving the good of the company at all.
According to Kant under the deontological ethics theory, the rules are more important than the outcome. In other words, the moral duty of a person is a better predictor of proper ethics than the consequences of that behavior (Herman, vi). A familiar notion of this theory is that a moral person so someone who always acts out of duty. In addition, a moral person is driven to do what is right even when it is not required (Campbell, 1). Those persons within the Enron corporation who chose not to conduct themselves in an ethically appropriate manner lacked this duty to do what was right. This brings a great lack of ethics to a corporation. If those employed by a corporation cannot run a business with correct ethics, than that business will, like Enron, ultimately fail.
Another key piece of the deontological theory states that a moral person will choose the moral path even when another, less than moral but more desirable, option presents itself (Campbell, 1). This part of the theory was not evident among certain employees of the Enron corporation either. Those employees knew what the moral decision would have been - not to commit accounting fraud. However, they chose the more desirable path that led to more money in their pockets. This is specific evidence that shows that these people were not moral nor did they conduct themselves in an ethically appropriate manner.
A successful business is run by supervisors who make ethically correct decisions. How someone in charge chooses to behave has a direct effect on how employees respond and behave themselves. “Ethical behavior on the part of the leader would appear to be a necessary condition for the establishment of an ethical organization, but this alone is not sufficient. Ethical leadership is required” (Aronson, 1). In order to have a business founded and operated under a certain set of ethically driven standards, those that are employed in managerial positions must have ethically moral behavior (Kanungo, 1). Ken Lay is a good example of a person who lacks ethics under the deontological theory. He was found guilty of conspiracy to commit fraud and, among other things, giving false statements to employees (Houston Chronicle, 1). According to Kanungo, Ken Lay was not a good choice of an ethically driven supervisor.
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