The second factor of fraud triangle is opportunity, there are high chance fraudsters would not be exposed because of their powers and position and there is a direct relationship between fraud opportunity and weak internal control (Dorminey et al., 2010). In the Madoff case, as a leader of the organization, he had sufficient power to plan the internal control system and corporate governance in such a manner that would only be favorable to him. It was found that the segregation of duties in Madoff scheme was not present (Fuerman 2009). The last element of fraud triangle is rationalizations - it is important to note how the individual is justifying the act committed by him. Day (2010) evaluates that Madoff was practicing this scheme firstly for his own benefit and for the benefit of his family by taking advantage of investors.
These benefits include cash bonuses, severance pay, stock options etc. If the takeover succeeds, it will be guaranteed that the employee will receive a large sum of compensation. However, this is not a tactic that defends the company from a takeover, but ensures that the existing top management of the company is well taken care of, in case the takeover initiative becomes successful. However, there are arguments for and against golden parachutes, wherein critics argue that the golden parachutes provide benefits to stockholders by making it easier to hire executives, especially those industries which are prone to mergers. Further, it also helps an executive to remain objective about the company during the takeover process.
He has direct responsibility or duty of care to his employers. The responsibility is to maximize profits for their company 's shareholders. Corporate directors also owe stakeholders a duty of care that is to say, a duty to make informed decisions for the benefit of the stakeholders. During the recent financial crisis, there was so much risk taken by greedy managers that when stakeholders lost money and it was revealed Directors were getting rich by the decisions then in response legislation had to address the need for increased risk assessment in our financial institutions, requiring increased disclosure to ensure that Directors would act morally, ethically and
He influenced his followers into defiant behaviors: - loaning top executives without putting these loans into writing. This is a sign of favoritism and normally brings resentment among workers especially those at lower level. Another defiant behavior is shunting other executive members who joined the company through mergers and acquisitions. He also influenced the fabrication of profitable numbers and incorrect classification of money. 2.
And that’s the reason why it takes a long time for an accountant to acquire the needed experience and to achieve a level of trust and professionalism in the eyes of the business’ management. However, instances of poor accounting may take place. And in most cases, such instances result in monetary losses for a business. Monetary losses and poor accounting are often blamed upon accountants (alongside managers or solely) but based on detailed observation several reasons prove the contrary and are mainly related to the internal management.
This was evident in his constant cost cutting messages. These visionary traits attributed to this leadership style often result from critical thinking, the compilation of facts and finding ways to solve a variety of problems (teamwork) 4. The law firm report identified Ebbers as the source of a culture that resulted in the company’s accounting fraud. How did Ebbers’s leadership style contribute to the values and actions of key managers? How could key managers perform their jobs effectively and ethically in the WorldCom culture?
A) Introduction Unethical behaviors in business affect everyone since you either work in the field or are a consumer of its services. Unfortunately, almost every company usually has individuals who act unethically whether it is for their personal benefit or for the sake of the company they work for. Unethical behaviors in business might be as simple as using company property or funds for personal gain to inside trading and financial fraud. According to The Chartered Institute of Management Accountants, nearly one third of business professionals feel pressured to compromise their ethical standards and are increasingly pushed towards unethical behavior. Moreover, “misconduct is common and accepted by business services professionals, the integrity of entire economic systems is at risk”, states Jordan A. Thomas, partner and chair of the Whistleblower Representation Practice at Labaton Sucharow law firm.
The misconduct of code of ethics by the management level by Enron corporation has led to the another question – The ultimate responsibility of a corporation towards society ? The ultimate responsibility of a corporation is to gain profit or become a stable economic unit ? (Johnson , 2014 ) In this case , it shows that under normal circumstances the management level of a company or corporation will choose to hide the truth over honesty and integrity .In other way , profitability has override the important of ethics in the corporation .
When Beam began understating the company’s expenses, he argues that the investors will only be misled by a “little.” Based on this statement, Beam is distorting the harm that he is inflicting. He felt that investors are smart enough to understand this and would not be harmed by it. He was convinced that his dishonesty
I am going to talk about ethical issues in practice of management accounting. Actually my discussion relies on my studying to the articles have published by ( prof. Iwan Triyowon) as well as my opinion. As all we know that the management accounting is the most important thing inside the company because it is the source of the information which is needed to make a decision and we have to know that information can be used by internal or external users but in our discussion here we will highlight and pay a strong attention to the information has delivered to the external users such as investors because there are some managers cheating the outside users by using some tricks (wizard). I illustrate the earning management as an example for the ethical