Author Question: Companies like Enron, WorldCom, and Tyco International, Ltd. have been caught in the midst of ... (Read 83 times)

vicky · **on:** Jul 5, 2018

Companies like Enron, WorldCom, and Tyco International, Ltd. have been caught in the midst of ethical lapses thatled to fines, firings, and criminal and/or civil prosecution. List and briefly describe three factors that are responsiblefor what went wrong in these companies.

Question 2

A nongovernment not-for-profit organization received donated services from a local volunteer. The volunteer works as a receptionist for the organization. The market value of service is 5,000 .

How should this activity be reported be in the statement of activities?
A. Not be reported.
B. Unrestricted support, 5,000.
C. Restricted support, 5,000.
D. Both unrestricted support and program expense, 5,000.

dudman123 · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

The three factors are: (1) individual character, (2) firm culture, and (3) lack oflaws and enforcement. Honesty, integrity, and fairness in the face of pressure tohide the truth are important characteristics of an ethical business person. Thebehavior and attitude of senior management sets the firm's culture. In firms likeEnron, senior managers created a culture of greed and indifference to thetruth. That culture flowed down to lower-level managers, who took shortcuts andlied to cover financial frauds. The lack of laws and enforcement has beenblamed as a contributing factor to financial reporting abuses. As a result, newlaws such as the Sarbanes-Oxley Act (SOX) established a new oversight body forthe accounting profession, known as the Public Company Accounting OversightBoard (PCAOB), and established standards to enhance corporate accountability,financial disclosures, and independence.

Answer to Question 2

A