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Enron And World Com Essay

530 words - 3 pages

Enron Corporation's fishy accounting practices, the siphoning of profits at Adelphia Communications Corp., allegations of tax fraud and lavish personal spending of company money at Tyco International and WorldCom Inc.'s bid to hide billions of dollars worth of expenses are just a few examples of unethical activities. Scandals and bankruptcies in the United States at companies like Enron and WorldCom Inc. have focused attention on the abuse of the power entrusted to executives by shareholders, employees and customers and they underscore the need for reforms to bolster business ethics. The free enterprise system is based on transparency and integrity. Transparency is being open to public scrutiny, even for a private company. Integrity is about keeping promises, telling the truth and ...view middle of the document...

Enron executives reaped millions through these partnerships and by selling off stock before the demise, while Enron employees lost much of their retirement and investors lost millions. info@alternet.orgArthur Anderson a firm that once stood for trust and accountability ended 90 years as an auditor of publicly traded companies under a cloud of scandal and shame. Its felony conviction for obstructing a federal investigation into Enron Corp., its now notorious client, cost Andersen the heart of its practice. It will continue with a tiny fraction of the 85,000 employees it spread across the globe just months ago. In the 1990s, the firm embarked on a path that valued hefty fees ahead of bluntly honest bookkeeping, eroding Andersen's good name. Andersen shunted aside accountants who failed to adapt to the firm's new direction. In their place, Andersen promoted a slicker breed who could turn modestly profitable auditing assignments into consulting gold mines.In the years before WorldCom Inc. announced the $3.9 billion in improper accounting that led to its bankruptcy this summer, the telecommunications giant was plagued by loose business practices, inadequate financial disclosure, and widespread internal chicanery and corruption. Salespeople and managers boosted their commissions by manipulating the company's billing systems. Orders for services or equipment were booked even if they were not provided, so that departments could meet revenue targets. Outside contractors billed for hours they could not have worked, and some equipment was purchased without anyone checking to see whether it was already in inventory. The documents also show that a small group of WorldCom executives, knowing that their business was eroding rapidly, discussed various accounting maneuvers that would help prop up the company's bottom line.

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