CORPORATE GOVERNANCE We can attribute societies demand for improved corporate governance on the number of recent financial scandals that have occurred in both the United States and abroad in the past decade. For many organizations, the way to rebuild shareholder confidence was to implement a fundamental framework of procedures that would ensure scandals like Enron, WorldCom and Tyco would not occur in the future. It is precisely these scandals that made corporate governance the focus of organizations worldwide. Corporate governance is defined as the principles and processes that provide the strategies on how an organization directs and obtains its goals, the oversight process for implementing effective accountability from its directors and managers (Rittenberg, Johnstone, & Gramling, 2012). What are two of the principles that surround corporate governance? How do they tie into the recent legislation that was put into place to resolve ethical challenges and changes within the last decade? Two principles that surround corporate governance include “successful management and ethical corporate culture and independence and objectivity” (Creel, 2013). It is management’s responsibility to create a culture of “integrity and ethical behavior” (Rittenberg, Johnstone, & Gramling, 2012). In addition, it is imperative for board members to maintain their objectivity and their judgment must remain independent and in the best interest of its stakeholders. Corporate governance seemed to disappear when top management of Enron believed their accounting method of mark to market and their off balance sheet partnerships was in the best interest of the organization. Did the auditors from Arthur Andersen believe they had something to hide when
they erased computer drives and shredded documents during Enron’s collapse? In addition to the failure of Enron, the Security and Exchange Commission charged Arthur Andersen when it was uncovered that senior auditors...
References: Creel, T. (2013). Corporate governance: Live chat presentation 2: [Auditing]. Colorado Springs CO: CTU Online. Retrieved January 15, 2013 from CTU Online, Virtual Campus, ACCT325-1301A-01: http://campus.ctuonline.edu/pages/MainFrame.aspx?ContentFrame=/Classroom/Pages/d efault.aspx Norris, F. (2002, January 11). Did Enron 's auditors think they had something to hide? Retrieved January 14, 2012, from The New York Times Business Day: http://www.nytimes.com/2002/01/11/business/did-enron-s-auditors-think-they-hadsomething-to-hide.html Rittenberg, L. E., Johnstone, K. M., Gramling, A. A. (2012). Auditing: A business risk approach. Retrieved January 6, 2013, from Colorado Technical University Online, Virtual Campus ACCT325-1301A-01: http://wow.coursesmart.com/9781285493664/firstsection
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