1. Ethics, Accounting &
Auditing
Case Studies
Victor Rodriguez, Ph.D.
Leiden
May 30, 2012
2. Outline
• Learning outcome
• Case 1 (USA) Enron
• Open discussion
MNGT 3400 Human Resource Management
3. Case 1 (USA) Enron
• Business model: commodity trading,
extrapolation
• Executives, managers, board of directors
• Auditors
• Accounting issue: off-balance-sheet
partnerships (moral hazard)
• Ethical issue: fraud
MNGT 3400 Human Resource Management
4. Open Discussion:
Public Companies
• What do these scandals mean for the
future governance and control of public
companies?
• Can these calamities happen again? Why
or why not?
MNGT 3400 Human Resource Management
5. Open Discussion:
Accountants/Auditors
• What were the corporate values of the firm?
• How did the firm build their strong culture?
• In your view, what were the reasons for the firm’s
problems?
• What internal factors contributed to changes in the
firm’s culture?
• And external factors?
• What would be your advice in terms of SHRM?
MNGT 3400 Human Resource Management
6. Sources
• Diermeier et. al. (2011) Arthur Andersen (B):
From Waste Management to Enron
• Lagace (2012) Innovation Corrupted: How
Managers Can Avoid Another Enron
• Rajan & Tayan (2008) Financial Restatements:
Methods Companies Use to Distort Financial
Performance
• Williams & Takeshita (2012) Olympus and the
Whistleblower President Christopher
MNGT 3400 Human Resource Management
Notas do Editor
off-balance-sheet financing is an accounting technique in which a debt for which a company is obligated does not appear on the company's balance sheet as a liability. Keeping debt off the balance sheet allows a company to appear more creditworthy but misrepresents the firm's financial structure to creditors, shareholders, and the public. Financial bailouts of lending institutions by governments, central banks or other institutions can encourage risky lending in the future if those that take the risks come to believe that they will not have to carry the full burden of potential losses. a moral hazard is a situation where there is a tendency to take undue risks because the costs are not borne by the party taking the risk
