(1)Applying the Agency and Stakeholder Theories to theEnron Debacle: An Ethical Perspective (1)If a firm is notdoing business in an ethical way, it is committinga series of blunders and crime. As discussed in the case Enron is a famousexample of ethical negligence.
It shows how indulging in immoralfinancial activities and breaching the code of conducts damaged the public sentiments. The Enronmanagement indulged in fraudulent reportingand bribed the external analysts on their payroll. This predicament resulted inbankruptcy and misfortune for investors. Therefore such case that started in a discussion room hit the global face as anlesson of ethics and moralitytowards corporate reporting.(1)(2) Business Ethics and FinancialReporting Quality: Evidence from Korea (2) Business ethics is a fundamental steptowards attracting and maintain customer base.
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Stakeholders consider businessethics as beneficial to invest in financial products. They don’t buy fromcompanies accused of unethical activities and liquidify their investments ofsuch guilty firms. Institutional investors also refrain from trading withimmoral companies. If a firm is publicly renounced guilty of practicingunethically, the users of these reporting outcomes exit the investment linesbecause there are many highly sensitive buyers who hold high moral respect. (2)(3)Corporate Collapses in Australia: Case of HarrisScarfe(3)Poor ethical mindset leadsto unlawful management decision. Management is the front line for theresponsibility, appreciations and blames and ethical line of directions savesenergies and investment for future benefits. It does so because in the race ofcompetition many firm don’t want to be left behind and always emphasize on topperformances. Thus when individual goals are not aligned with the truthfulbelieves, the whole firm suffers from down fall.
Ethics encourages teambuilding because most of the problems arises by the individual motives andgains. (3) (3)Ethics reporting provideimmense benefits to accountants and those who rely upon them. Being moraltowards their responsibilities bring prosperity in a long run.
It helps them todevelop higher levels of reliability and competence in corporate settings. Byadherence to the concept of ethics, accounting and audit professional achieve agreater goal, i.e.
, social togetherness. Corporate morality narrows theexpectation gap which lies between the top management and the auditors. If anaccountant is not faithful towards financial report preparation or if theauditor is not trustful regarding checking the authenticity of financialreports, it causes a negative impact on the accounting and auditing society asa whole. In many case accountants and auditors fall prey to greed of topmanagement by providing nonrealistic audits like in the case of Harris Scarfein the early millennium. The firm collapsed after a series of fake financialpostures.
(3) (4)ETHICAL ISSUES OF FINANCIALREPORTINGIntro(4)A system of belief shaped by morally accepted code of conduct iscalled ethics as discussed inthis article. Business ethics is the adoption of ethical conduct towardsrunning the affairs of business. Though ethics are voluntary in nature but intoday’s world business ethics are related in active as well as passive way.Ethics restricts peoples from indulging in fraudulent and criminal businesspractices which are highly disregarded in human societies.
It builds highvalues for a business like openness, integrity, reliability and honesty. Thedesire to earn profit is at the core of each business but the means to achieve thatgoal through ethical practices reflects the core humanity features. In recentpast, the importance of ethics in business has gained a lot of importance andmost probably after the fall of giant companies due to fraudulent reporting,misstatement of revenues and faking the company share prices. Ethical course ofconduct in business always bring fortune and regarding corporate reporting,ethical conduct has gain significant importance for success and credibility inlong term business goals.(4)(5)Implication of financialstatements(5)Ethical consideration is essential when it comes to stakeholders ofdifferent financial reports. Ethical empower independence in cases where theusers of a financial document demand a higher degree of authenticity of theinformation provided to them for future endeavors. (5)(5) Moral and dignified approach becomes a necessity because many behavioraltheories says that human are motivated by their own interested and as well as accordingto this reportopportunistic considerations rises the platform for exercising selfinterest.
(5)(6)multi-dimensional ethicalapproach to accounting and reporting practices(6)A company when exercisebusiness ethics with full zeal it actually does it through trading off betweenthe social responsibilities and financial objective. Ethical practice attachedmany corporate benefits for the management, independent player and investorsand society as a whole. Ethical firms are apparent by the moral values theypromote and experience in their surroundings. Business ethics give rise toopenness in a firm because the stakeholders are more concerned when a firm keeptheir affair hidden from the investors and shows them false truth to believe. Thewelcoming attitude is necessary to boost the confidence of stakeholders in thefirm. By openness, a firm takes corrective measures towards betterment whennecessary and do not fake the reality by indulging in various misleading activities.It helps them to keep on improving their operations and this is the reason thatthey accept all failure in business competencies which could be overcome inshorter period rather than misleading the users of financial reports towardsdoom forever.
(6)(7)FINANCIAL STATEMENT ISSUES (7)So auditors are more on the verge on blamedbecause they have to perform their duties in more independent settings toensure the validity, authenticity and fairness of the financial reportsprepared by a company management. (7)(8)AUSTRLAIAN COLLAPSE ALI YAFTIAN(8)Businessboundaries for long term sustainability are defined so that the public interesttowards the firm is not violated by the intermingling of non-performingservices. Especially ethical behavior uplifts the rule and regulatoryguideline. For auditor, independent and confined services create fair outcomesof the services they provide.
Likediscusses in the case that auditor are more at verge of doubtfulness ifthey go beyond the limits of their responsibilities and indulge in activitiesirrelevant to the task they are paid for. Such activities by Anderson (in the case) are notimmoral until they conflict with the public interest rather than managementintentions. Once an auditor is motivated by personal gains they becomequestionable and commit unethical practice because they are bound by the payersto perform on sinful tone of management (in the case). (8)(9)Financial reportingregulations, ethics and accounting education (9)However there are shortfallsthat despite massive importance and emphasis of ethical representation inpersonal as well as professional life, sometimes ethical behavior is turnedoff. According to this reportthere is a believe that the ethical negligence cause severe blindness to peoplewho believe that what they are doing is lawful and ethical despite the wholeworld shout against their ethical illiteracy.
(9)ConclusionBased on the discussion, ethical empowerment is thesafeguard against evil practices of corporate world. Many regulatory bodies haveemphasized the importance of ethics in their rules and code of conduct. Ethicalperspective of business dealing could be made more vigilant by enforcing strictcheck and balance across the financial reporting matter. In corporate world,reporting is agreed to be the most crucial element which is based upon higher ethicalstandards for survival so it must be dealt with utmost care to deliver optimum levelsof ethical behavior. The need therefore is to legalize such matters which fuelthe personal interests and opportunity gaps.
In business, the positioning ofadministration team and reporting team must be shifted towards the users. As itis not a matter of some companies; it is a shield for whole human societyagainst atrocities of financial misconduct and lifelong shames.