(Answered) AC114 Unit 2 Discussion Ethics and Financial Statements

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AC114 Unit 2 Discussion Ethics and Financial Statements

Throughout this course, many discussion opportunities come up where you need to respond to other people’s opinions and comments. Address the Discussion topic after you have completed your reading.

Topic 1: Ethics and Financial Statements

The accounting profession has been impacted by several corporate scandals in recent years. Discuss the importance of the role of Ethics in accounting by examining firms such as Enron®, World Com® and JP Morgan®. Use library data to research information about each scandal, provide a brief summary of the scandal, the name of the auditing firm of the organization whose scandal you have chosen (there are other scandals that you can examine), and its impact on accounting ethics.

AC114 Unit 2 Discussion Ethics and Financial Statements Answer

In the early 2000s WorldCom was the nation’s second-largest long-distance company. What this company had done during a time where telecom companies were either dead or dying was showing profits that were doubling year over year. With a $3.85 billion wrong number, and more than $30 billion in debt, where even selling off the company in pieces would not even cover the debt incurred, the chief financial officer started treating certain expenses as capital investments. The thing about expenses is that they are charged against profits immediately, and in this case, capital investments are spread out over a long period of time, some lasting up to 40 years.

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