Ethics Paper

ACCT 301 |

Ethics Paper

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Intermediate Accounting |

SUBMITTED BY: MANUEL VILLAFUERTE

1/22/2012

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Ethical values are essential to the progress of all individuals and of any nation. Ethical values are crucial to the functioning of all business in general and society as a whole. Business and society depend on individuals making personal ethical decisions that are fundamental to responsible business operations and to an orderly society. "The purpose of ethics in accounting and business is to direct business men and women to abide by a code of conduct that facilities public confidences in their product and services" (Dr. Smith, L Murphy). The accounting profession has a long history of contributions to the efficient functioning of business operations, the capital market system and the economy in general. In the wake of corporate scandals and a struggling world economy, we look back at the accounting scandal at Enron, from an ethical perspective, the company which the media portrayed was the last straw that broke the camel's back.

Enron was a large energy, commodities and services company, marketing electricity and natural gas, and providing financial and risk management services around the world (Cunningham, Lawrence 2002). Enron Corporation was created in 1985, shortly after the federal deregulation of natural gas in North America. Enron was formed by the merger of two natural-gas pipeline companies, Houston Natural Gas, one based in Houston, and the other in Nebraska, InterNorth (Dobson, John 2002). The merged company owned 37,000 miles of intra- and interstate pipelines for transporting natural gas between producers and utilities. The complex industrial structure of Enron was vast and only understood by a few people outside of Enron at the time of its filing for bankruptcy in December 2001. There was no clear picture or complete information as to the true levels of its assets, liabilities and offbalance-sheet positions (Cornford, Andrew, 2002)....