Review of Accounting Ethics

Review of Accounting Ethics

Introduction

The foundation of civilized society is based on the ethical values and without these values; the civilized society can fall rapidly. The main purpose of ethics in business is directing men and women to obey code and conducts that encourages the people to have confidence in the products or services offered to them. In the field of accounting, it is the responsibility of the professional accounting organization to provide comprehensive guidelines to the organizations so they can perform their operations by considering ethical values. The purpose of this paper is to explain unethical accounting practices performed by the company “WorldCom” and impact of ethical breach on the organization.

Discussion

It is a fact that there is no magical formula in order to make people act in an ethical manner in the business and according to past researchers, it has been observed that the criminals in the top management of the organizations is more where they have gone through formal training. The educators of management do not seem to concentrate on giving proper training regarding business ethics because they cannot change the overall thinking of the competent and intelligent managers for performing unethical acts. Apart from the ethical qualities of the individuals, it is important that the moral environment of the organizations is conducive as well. In the recent times, the present business and regulatory environment is conducive for the organizations because awareness of the people has significantly increased because of media, internet and social networks for the past decade. This is the reason that most of the organizations believe in performing different Corporate Social Responsibilities (CSR) activities and gives first priority to ethics during operations (Ferrell et.al, 2008). The rules and regulations of different governments have made mandatory for the organizations to perform ethical activities and if they are not able to perform ethical activities, then social media can completely damage their reputation (Fernando, 2009). Therefore, it can be said that today's environment is more favorable for the businesses and they can operate effectively by performing ethically.

In the year 2002, chapter 11 bankruptcy protection was filed by the WorldCom Inc, and this was the largest bankruptcy in the history the US being twice large as compared to Enron's filling in the year 2001. WorldCom admitted that the company booked $3.85 billion falsely in the expenses in order to make the company profitable in front of the public, shareholders and stakeholders. The auditor of the company accused the financial officer that he was responsible for withholding important information of the company's booking therefore; the financial officer was fired immediately. WorldCom was made by the acquisitions of different telecommunication companies and in the year 2001, it was amongst the largest telecommunication company of the US.

The company was valued at 180 billion at the peak of its boom, but from this stage, the company started to face job cuts, decreasing credit ranking grades and fall in the stock price. Ebber was the CEO of the company since ...