Choose three virtues (e.g., justice, fairness, integrity, courage, honor, truthf
ID: 429727 • Letter: C
Question
Choose three virtues (e.g., justice, fairness, integrity, courage, honor, truthfulness, etc.), and define each using a reputable online dictionary, e.g., http://www.merriam-webster.com/
Using a section heading for discussion of each of your chosen virtues, discuss how each virtue applies to some ethical issue raised by the Enron case. For example, you might choose “integrity,” in which event you will define what is meant by integrity, followed by a discussion of how the lack of integrity on the part of Enron’s leadership contributed to the company’s accounting fraud. Or you might choose “fairness,” and discuss how the company’s fraudulent activities adversely impacted one or more of its stakeholder groups, e.g., its employees, stockholders/investors, customers.
Explanation / Answer
Truthful
Definition:
: telling the truth
: containing or expressing the truth
Enron`s case:
Enron never told the truth, nor to the shareholders, or its customers. They always hide the correct numbers to keep their stock price.
Also, Enron adopted Mark to market accounting.
Mark-to-market accounting requires that once a long-term contract was signed, income is estimated as the present value of net future cash flow. Often, the viability of these contracts and their related costs were difficult to estimate
Due to the large discrepancies of attempting to match profits and cash, investors were typically given false or misleading reports. While using the method, income from projects could be recorded, although they might not have ever received the money, and in turn increasing financial earnings on the books
Integrity
Definition:
: The quality of being honest and fair
: The state of being complete or whole
Enron`s case:
On Enron`s case we can say there was not integrity on the executives, executives were not honest to the stake holders and they presented financial statements that were confusing to analyze, they modified the balance sheet to indicate favorable performance.
Due to the bonus structure Enron used with his employees, they constantly tried to start deals, often disregarding the quality of cash flow or profits, in order to get a better rating for their performance review and immediately accounting results were re order to keep the company stock price
Justice
Definition:
: the process or result of using laws to fairly judge and punish crimes and criminals
Enron`s case:
Most of the top executives were tried for fraud after it was revealed in November 2001 that Enron's earnings had been overstated by several hundred million dollars.
In June 21, 2013 - A federal judge reduces Jeff Skilling's (former CEO) sentence by more than 10 years. As part of the resentencing deal brokered between prosecutors and the defense, Skilling agrees to stop challenging his conviction and forfeit roughly $42 million that will be distributed among the victims of the Enron fraud.