Business Case Studies,Corporate Governance & Business Ethics Case Study, Flour Corp's Business Ethics Practices: Creating Six Sigma Standards in Staying Corruption-Free

Code : GOV0028B

Year : 2006

Industry :Consulting

Region : USA

Teaching Note: Available

Structured Assignment : Available

Abstract: Corporate Accounting scandals were the outcome of wrongful deeds of the executives of publicly held companies. These wrongful acts and misrepresentations involved devious methods of misdirecting funds, overstating the revenues, suppressing the expenses, overstating the value of corporate assets and underreporting of the existence of liabilities, often with the connivance of top executives and the accountants who were bestowed with the responsibility of expressing an independent opinion on the truth and fairness of the financial statements. In the US, Securities Exchange Commission (SEC) relied on the accounting industry for formulation and implementation of Accounting Standards.

In 2002 a series of accounting scandals surfaced in the US which involved the big accounting firms like Arthur Andersen, KPMG and others. These accounting firms were charged with negligence in the execution of their duties as auditors to identify and prevent the publication of falsified financial reports by their corporate clients, which had the effect of giving misleading impression of the companies’ financial status. In several cases, the monetary amounts of the fraud involved were billions of US Dollars. Some of the notable instances of corporate accounting fraud, which made headlines, were the Enron and WorldCom cases. This threw open the question as to where does the final responsibility lie, for the truth and fairness of the financial information relating to publicly held companies. The gravity of the issues involved in some of these high profile cases involving global accounting firms threw open the question, how reliable were published financial information?