Business and Professional Ethics
Financial malfeasance is an act of outright sabotage where one of the parties to a signed contract takes an economic activity that is capable of causing internal damage. Some of the financial malfeasances that misdirect investors include the inappropriate scrutiny of the overall corporation leading to lack of proper oversights in finances and the failure to pay adequate attention to the expenditure of the organization’s resources on program implementation (Griffin, et al, 2014). This paper aims to identify instances of misrepresentation in the Enron, Arthur Andersen, and WorldCom.
The investors, employees, regulators, as well as the public, were harmed and misled by the fraud. Here, the misrepresentations included recognizing the revenues prematurely by use of prepays, the syndication of SPEs, interest conflicts by the board of directors as well as false financial statements. Those that benefitted include the senior management of Enron and partners at Arthur Andersen (Brooks & Dunn, 2018). In Arthur Andersen, the misrepresentations involved the employment of a culture that was focused mainly on the production of revenue through non-audit services. Also, they involved Carl Bass removal, the quality control partner from the provision of oversight audit (Janney & Gove, 2015). Among those that benefitted are all partners who shared the profits obtained from non-audit sanctions. Misrepresentations in Arthur Andersen were solely responsible for employees’ loss of jobs as well as the clients who had found new accounts upon the collapse of the partnership.
In conclusion, in WorldCom, among those that were misled by the fraud just like in Enron, were the employees, the entire public, the regulators as well as the investors. In this scenario, the misrepresentations include capitalization expenses and lack of oversight of the CEO. The beneficiaries, on the other hand, included Sullivan, Ebbers as well as other executives of the corporation and members of the board who held the lucrative stock options.