Accountant's Responsibility example essay topic

I am going to be talking about the company that filed for the largest bankruptcy of all time, and that is the American energy company, Enron Corp and who was responsible for it. The reason I have decided to speak on Enron is because it was indirectly responsible for many other corporate collapses. This graph gives shows us how it effected other companies. Immediately after the bankruptcy, most people began to speculate that their bankruptcy was a result of their accountants, and their inability to detect and rectify the situation.

However, as the investigations into the bankruptcy got under way it became clear that it was not only the accountant's responsibility but also the responsibility of many other important parties of the company including, the CEO, The Board, Management, Shareholders', Bankers and Lawyers. The most obvious blame belongs to the CEO who had the overall authority and responsibility for management and financial reporting. A CEO cannot claim to be doing his job and to be ignorant of accounting fraud, at least not in the same sentence. The CEO may not have produced the bad accounting numbers but he must not encourage, tolerate or be ignorant of those who do. After all, the highly paid CEO's job includes the responsibility to oversee accounting functions. The board of directors in any company is responsible for creating a system of corporate governance.

After many investigations into Enron were carried out it became clear that The Board of Enron had failed to set a system of good corporate governance. Many professionals believe that they should shoulder most of the responsibility of the bankruptcy because of not doing so. Shareholders must shoulder some of the blame. Exuberance and greed had propelled share prices to unreasonable and unsustainable levels.

Management was often forced to live up to irrational capital market expectations. Since, these expectations could not be met through actual results, they were, with a little help from friends, achieved with reported results. This unrealistic share price as illustrated in the graph kept everyone happy... for a while, especially during year 2000. After that it was a case of management needing to find a way to pay the bank back, but they couldn't find one and then restated their earnings on route to bankruptcy.

This is how different their net income looked when first reported and after it was restated. Banks, investment bankers, and speculators also played a major role. They knew how much money passed through their machines. So when the company posted earnings that were non-existent, they could have asked, where did those earnings come from? Lawyers and law firms involved with the company were as culpable as anyone else. They did not cover themselves with glory and did nothing while to stop the crookedness that was going on.

By now it should be crystal clear that the enron failure and many other corporate failures were the results of stupidity, greed, dishonesty, self-interest, fraud and incompetence by all the members of the company collectively and not just the accountants. I mean come-on its obvious, as obvious as saying a dog barks. Yet the accounting profession has been a scapegoat and its very future put into doubt. In conclusion all I can say from an accounting perspective is that and I quote The United States Securities and Exchange Commission Chairman, Harvey L. Pitt. Begin quote: "A strong accounting profession is key to our capital system, but it should be the responsibility of every accountant to ensure that they carry out their tasks with a minimum level of professionalism".

End Quote.