Impact of Unethical Behavior

Essay by rid.khanUniversity, Bachelor'sA-, June 2010

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Impact of Unethical Behavior

Rid Khan

University of Phoenix

Financial Accounting II

ACC 363

James Makofske

May 15, 2007



Impact of Unethical Behavior

In today's business world, a company cannot survive unless employees are able to accurately and effectively complete his or her job duties. A company may have a product or service that is essential for everyday life; however, if a company cannot depend on its employees to complete his or her job ethically, the company as a whole will not be successful. In business, ethics plays a major role in determining the success of a company. Ethics is the study of values and customs of a person or group and covers the analysis and employment of concepts such as right and wrong, good and evil, and responsibility (Merriam-Webster, n.d.). This paper will discuss an example of how unethical behavior impacts business and how the Sarbanes-Oxley Act has established new or enhanced standards for accounting and reporting practices.

One of the most well known examples involving unethical behavior is the Enron Corporation scandal. Enron Corporation was previously known for being one of the world's leading electricity, natural gas and communications companies but will now always be known for accounting fraud and corruption. The company reported inflated estimates of income and did not report all debts that the company owed. In 2001, Enron Corporation filed for bankruptcy, which led to criminal investigations of money laundering, insider trading and fraud involving top executives. Although top level executives at Enron were likely aware of the debt and the illegal practices, the fraud was not revealed to the public until October 2001 when Enron announced that the company was actually worth $1.2 billion less than previously reported...