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Ethics Article Review

Essay by   •  December 21, 2010  •  874 Words (4 Pages)  •  1,723 Views

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Ethics Article Review

This paper will discuss ethics in the business world or the lack there of depending on your perception of the summarized article. Companies today are under severe scrutiny because of the abuse of a few over zealous executives who may have outplayed their hands. The U.S. Securities and Exchange Commission (SEC) has exposed more than a few of these executives who tried to fool the world. Now with the implementation of the Sarbanes-Oxley Act along with the SEC the public may now feel as though ethics may be restored in business again.

In a recent internet article that was written by Ben Ames, he told how two executives from Gateway Inc were found guilty on charges of fraud, making false statements to the accountant, violating record-keeping provisions of federal securities laws and aiding and abetting Gateway's violation of those laws. Gateway Inc is one of the top personal computer vendors in the nation and the top executives were found guilty of manipulating the numbers to meet Wall Street expectations. (Ames, 2007) The executive were John J. Todd, the company's former chief financial officer (CEO) and Robert D. Manza who was the former controller of Gateway. According to the SEC the two of them concealed important information about the company's success from the investors. In one of their schemes the company was offering credit to customers whose credit applications had previously been denied. The two executives then bragged about how great the company sales were doing without letting the stockholders know they were making such risky loans. Gateway will now have to try to regain the trust of investors and of the public because of this unethical business practice even though there is currently a new CEO of the company. Additionally, prior to this verdict Gateway just turned down a sizeable $450 million buyout less than six months ago which is an offer the company may not be able to get in the future. Randall Lee, the director of SEC's Pacific Regional Office in Los Angeles stated "Gateway executives failed to discharge one of their most important responsibilities: to communicate with investors fairly and accurately about their company's financial and business performance." (Ames, 2007)

The article relates to this weeks reading about insuring the integrity of financial reporting and fraudulent financial reporting. Gateway is just one of many companies such as Enron and WorldCom who have become victims to such unethical behavior from top executives. Only by keeping a close eye on the day to day activity of such a large organization can one detect such manipulation of the accounting processes. Companies hire outside organization not only to help with the detections fraudulent accounting activities but also to help the company find more cost effective ways to manage their business. Fraudulent reporting not only hurts the company but hurts all the people associated with the company and the public. This type of reporting can be and has been the downfall of some of the largest companies in our nation.

Advanta Bank Corp. (ABC) the company that I currently work for can also become a victim of such unethical behavior but I do

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