Question;Module 4 - Case;FINANCIAL;REPORTING;Assignment Overview;The pinnacle of all financial;scandals is arguably the ?perfect storm? associated with the former Enron;Corporation, which became public knowledge in October 2001. The news of this;scandal destroyed a company that had established a stellar reputation for;innovation in the energy industry and for generosity in the Houston community.;Collateral damage affected its top-level managers, its auditor Arthur Andersen;and the financial reporting firms that apparently cooperated in the deceit. Add;in the losses incurred by investors, employees, customers, suppliers, local;non-profits, and the families directly impacted by this event, and the adverse;effects of the scandal can be seen as truly widespread. Finally, the scandal;exposed the whole financial community to a tarnished reputation and loss of;faith among its constituents and lawmakers, leading to the passage of the;Sarbanes-Oxley Act, which required costly reforms to the whole financial;reporting process for publicly held firms.;A sampling of the practices;exposed during the Enron investigations;?;Boosting reported profits and hiding debts totaling over $1;billion by improperly using off-the-books partnerships.;?;Manipulating both the Texas and California power markets.;?;Deceiving potential energy customers with questionable claims;regarding potential savings.;?;Bribing foreign governments to win contracts abroad;manipulating California energy market.;Ultimately several Enron;executives were convicted of felonies. CEO Kenneth Lay?s successor, Stephen;Cooper, said Enron might face $100 billion in claims and liabilities, and the;company filed for Chapter 11 bankruptcy. Its auditor, Arthur Andersen, was;convicted of obstruction of justice for destroying Enron documents and forced;out of business. In the background of these events, it?s interesting to note that;both Enron and Andersen had codes of ethics that were widely heralded among;business ethics experts but also were reported to have highly competitive;organizational cultures that rewarded achievement with little or no oversight;regarding potential misconduct by individuals or units within the organization.;Case Assignment;Review the background readings.;You?ll also find a lot of material devoted to the Enron and other financial;scandals that have occurred during the last decade or so. Just Google ?financial;reporting? to start your research. The following item is a place to start;Folger, J. (2011). The Enron;collapse: A look back. Investopedia,December 1. Retrieved May;16, 2014, at http://www.investopedia.com/financial-edge/1211/the-enron-collapse-a-look-back.aspx;Answer the following questions;1.;Identify one of the examples of financial reporting misconduct;associated with the Enron scandal.;2.;Identify the stakeholders likely to be affected by that;misconduct (including those who may have benefitted) and explain the likely;impact it had on them.;3.;From a deontological as well as a utilitarian perspective, what;would have been the more ethical course of action? (Frame your answer to this;question in terms of these ethical principles.);Write a 2- to 4-page paper, not;including cover page and reference page. Be sure to set out both the;utilitarian and deontological considerations.;Assignment Expectations;Your paper should be;double-spaced and in 12-point type size.;Your paper should have a;separate cover page and a separate reference page.;Use APA style, and proofread;your paper.;Upload your paper by the end of;the module.
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