FIN 571 Week 2 Ethics and Finance

Aug 8th, 2016
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The Sarbanes-Oxley Act of 2002 (SOX) was passed as the result of the Enron scandal and other instances of accounting fraud. This act was passed to strengthen the role of the Securities and Exchange Commission (SEC). Research a case of corporate financial abuse related to the Sarbanes-Oxley Act of 2002 and apply this to your current work or desired place of employment. Create a 1,400-word analysis of the application of SOX in which you include the following: • Discuss the mistakes made by the company and their leadership. • Discuss the steps leadership could have taken to prevent or mitigate the repercussions. • Explain the role of market pressures on unethical behavior. • Examine the influence of the basics of finance and how the Sarbanes-Oxley Act of 2002 changed things. • Evaluate the influence of Sarbanes-Oxley Act on ethical behavior. Are businesses more ethical since the enactment? • Explain the changes companies needed to make in how they use and present financial statem

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Ethics and FinanceEthics and FinanceFIN/571Ethics and FinanceIntroductionEnron was a company that was started by Kenneth Ray in the 1985. It grew tremendously intheir role of generating electricity across the U.S. until the early 21st CenturyWhen its downfall started (Fox, Loren 2003). Enron had been one of the greatest revenuegenerating companies in the U.S however, during the year 2000, it was discovered that thecompany was falling. The company had made losses for the last three years without makingthe disclosure.The company had managers who were used to placing bets on the prices of oil whereby theyused the shareholders money in the betting. The companys management gambled withshareholders funds which consequently led to generation of losses. In the late 1990s, thecompany adopted a business strategy which facilitated the passing of liabilities which would notbe recorded in the books of account of Enron (Peter, Ross 2002). This made Enron report profitswhile the reality was that the company was generation losses in the past liabilities. The companyrecord the profits of the business once the company had secured a contract. This meant that thecompany would record profits before they could actually be generated. The recorded losses anddebts in a different account which would ensure that they would not be recorded in the financialstatements (Robert, et al 2002). The company also decided to disclosed limited informationwhich led to misinforma

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