Ethics, Accounting & Auditing

Case StudiesVictor Rodriguez, Ph.D.

LeidenMay 30, 2012

Outline

• Learning outcome• Case 1 (USA) Enron• Open discussion

MNGT 3400 Human Resource Management

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

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

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

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