Unethical Accounting

Accounting is a method used to provide information with regards to the financial position of a company or an organization.   The information provided to investors is very important because it provides the investor with valuable information that can lead to their determination as to whether they should decide to invest or not to invest in a specific organization.

Some unethical practices in accounting include misleading financial analysis for personal gain, exaggeration of revenue, and providing incorrect information pertaining to the company’s expenses and liabilities, misuse of funds, or exaggerating the value of corporate assets.   In addition, to these unethical behaviors there are other unethical practices like insider trading, bribery, securities fraud, and manipulation of the financial markets.

Enron Scandal

Enron expanded into new areas beyond gas pipelines at an alarming rate.   This was their initial mistake. Many of the markets it established did not work.  One of the largest contributions towards bankruptcy was due to the wrong doings of the accountants.  The bookkeeper’s wrote false statements about the profits, the losses, and charges that Enron had received. Enron partnered up with one of the largest accounting firms in North America which was Arthur Anderson Inc.  After much investigation it was revealed that Arthur Anderson Inc. hid many different losses.  

Anderson had shredded documents and erased computer files about the accounting of Enron. It would sell a subsidiary that was losing money to another company - a shell company which Enron set up, owned and financed. By doing this, the losses were erased from Enron's balance sheet, and in their place was a 'cash inflow' from the shell company Enron had created. (The balance sheets never indicated that Enron had lent this money to the shell company and that it was repaying itself and counting the repayment as income.) Equally corrupt was Enron's practice of booking the total energy...