Enron case that shook the public confidence in accounting

1. Enron case goes in" rel="nofollow">into history as the most important case that shook the public confidence in" rel="nofollow">in accountin" rel="nofollow">ing profession and paved the way for enactment of the Sarbanes-Oxley Act. The majority of the chapter is taken up by the facts of the Enron case. Although this was a major fraud perpetuated on the general public and the employees and shareholders of the company, it was actually the end of a series of frauds. The actions of WorldCom tipped the scales, and as a result Congress fin" rel="nofollow">inally acted, in" rel="nofollow">institutin" rel="nofollow">ing the Sarbanes-Oxley Act, which pushed government regulations onto the accountin" rel="nofollow">ing profession. Up until that time, the profession was self-regulatin" rel="nofollow">ing and the government had a hands-off attitude. When Enron and WorldCom broke, however, they could no longer sit back and allow the profession to do what it wanted while they looked the other way. The ironic thin" rel="nofollow">ing about the actions taken was that Congress was already movin" rel="nofollow">ing in" rel="nofollow">in this direction, but WorldCom’s break sped up the process. As outlin" rel="nofollow">ined in" rel="nofollow">in the book, Enron origin" rel="nofollow">inally restated their fin" rel="nofollow">inancials in" rel="nofollow">in October 2001 and, as a result, declared bankruptcy in" rel="nofollow">in December 2001. Durin" rel="nofollow">ing the early part of 2002, Congress was workin" rel="nofollow">ing on some regulatory changes; however, WorldCom filed for bankruptcy in" rel="nofollow">in June 2002, and the Sarbanes-Oxley Act was passed June 30, 2002. From the Enron case, assume that you are new members of the Board of Directors for Enron. What questions would you ask? What are some of the questions that the B.O.D. should ask? Why would you ask the questions that you did? (In other words, what are you tryin" rel="nofollow">ing to fin" rel="nofollow">ind out or accomplish?) 2. Employees should be loyal to their bosses." Or, "Subordin" rel="nofollow">inates should follow the orders given to them by their manager." What is the meanin" rel="nofollow">ing of the above quotes? How would you answer the question: What is more important, to be true to oneself, or to be true to one's company? 3. Technology and Social Change In what way or ways is the current knowledge revolution a child of the Industrial Revolution? Is this a new revolution or simply an extension of the 18th-century revolution? Given the history, is it perhaps more appropriate to call the current revolution a communications revolution? 4. QUESTION .. Your onlin" rel="nofollow">ine lesson this week details the events of the Protestant Reformation, a historic turnin" rel="nofollow">ing poin" rel="nofollow">int for Western civilizations. Please discuss the specific role that the Protestant Reformation played in" rel="nofollow">in layin" rel="nofollow">ing the groundwork for the advancement of communication techniques and technologies within" rel="nofollow">in Western culture. A Historical Turnin" rel="nofollow">ing Poin" rel="nofollow">int: The Protestant Reformation The Protestant Reformation profoundly changed Western culture and split Christianity in" rel="nofollow">into two distin" rel="nofollow">inct groups. The theological ideas of a simple 16th-century German monk changed Western civilization. But the ideas of Martin" rel="nofollow">in Luther and other Reformers were join" rel="nofollow">ined by a new revolution in" rel="nofollow">in technology—the prin" rel="nofollow">intin" rel="nofollow">ing press. With prin" rel="nofollow">intin" rel="nofollow">ing, knowledge for the first time became accessible to the common person. And once the Bible was available in" rel="nofollow">in the vernacular, or common tongue, belief itself could never again" rel="nofollow">in be the same. Few in" rel="nofollow">individuals, if any, have changed the course of history like Martin" rel="nofollow">in Luther. In less than 10 years, this German monk plunged a knife in" rel="nofollow">into the heart of a church that had ruled for a thousand years, an act that set in" rel="nofollow">in motion a trail of revolution, war, and conflict that would reshape Western civilization and lift Western Europe out of the Dark Ages. Luther was born in" rel="nofollow">in the northern German city of Eisleben in" rel="nofollow">in 1483. Little is known of his youth, but we do know that his family struggled fin" rel="nofollow">inancially. In 1501, Luther moved to Erfurt to begin" rel="nofollow">in his studies in" rel="nofollow">in law at the university. On July 2, 1505, Luther was returnin" rel="nofollow">ing to Erfurt after visitin" rel="nofollow">ing his parents in" rel="nofollow">in Eisleben when he was caught in" rel="nofollow">in a terrible thunderstorm. Luther vowed to serve God alone if he were spared. Again" rel="nofollow">inst his father's wishes, Luther join" rel="nofollow">ined the Augustin" rel="nofollow">inian order and was ordain" rel="nofollow">ined a priest in" rel="nofollow">in 1507. Luther, by all accounts, was a serious monk. Despite his outward joviality, he was deeply concerned all his life about questions of faith and salvation. He was shocked by the immorality of the church after a journey to Rome in" rel="nofollow">in 1510. A wise superior, Johann von Staupitz, saw that Luther was best fit for an active life and sent him to the Augustin" rel="nofollow">inian monastery at Wittenberg to teach at the Duke's new university. It was while lecturin" rel="nofollow">ing on the Psalms that Luther came to his decisive discovery, some say by 1515. Luther himself looked back at these events near the end of his life and said: Though I lived as a monk without reproach, I felt that I was a sin" rel="nofollow">inner before God with an extremely disturbed conscience. I could not believe that he was placated by my satisfaction. I did not love, yes, I hated the righteous God who punishes sin" rel="nofollow">inners, and secretly, if not blasphemously, certain" rel="nofollow">inly murmurin" rel="nofollow">ing greatly, I was angry with God. . . . At last, by the mercy of God, meditatin" rel="nofollow">ing day and night, I gave heed to the context of the words, namely, 'In it the righteousness of God is revealed, as it is written, "He who through faith is righteous shall live."' There I began to understand that the righteousness of God is that by which the righteous lives by a gift of God, namely by faith. And this is the meanin" rel="nofollow">ing: the righteousness of God is revealed by the gospel, namely the passive righteousness with which merciful God justifies us by faith, as it is written, 'he who through faith is righteous shall live.' Here I felt that I was altogether born again" rel="nofollow">in and had entered paradise itself through open gates. (as cited in" rel="nofollow">in Bain" rel="nofollow">inton, 1995) With this discovery, he turned on the Church, attackin" rel="nofollow">ing its practice of sellin" rel="nofollow">ing in" rel="nofollow">indulgences as buyin" rel="nofollow">ing one's way in" rel="nofollow">into heaven (Lin" rel="nofollow">indberg, 1996, pp. 58–63). On All Hallows' Eve, October 31, 1517, he nailed his "95 Theses," or statements of protest, on the church door in" rel="nofollow">in Wittenberg. These protests led to violent confrontations throughout Germany. Luther's ideas benefited from the newly in" rel="nofollow">invented technology of prin" rel="nofollow">intin" rel="nofollow">ing. Within" rel="nofollow">in 3 months, Europe was awash with copies of Luther's theses. Between 1517 and 1521, Luther wrote some of his most famous treatises, in" rel="nofollow">includin" rel="nofollow">ing "On the Babylonian Captivity of the Church." These treatises helped spread Reformation ideas throughout Europe. Because of the low literacy rate, these pamphlets were often illustrated by such artists as Albrecht Durer and Lucas Cranach. Political cartoons entitled "Passion of Christ" and "Anti-Christ" furthered the goals of the Reformation (Scribner, 1981, pp. 150–155). The defin" rel="nofollow">initive break came when Luther was summoned to appear before the Diet of Worms in" rel="nofollow">in 1521. He had to appear before the emperor twice, each time bein" rel="nofollow">ing clearly told to recant his teachin" rel="nofollow">ings. But Luther refused: Unless I am convin" rel="nofollow">inced by Scripture and plain" rel="nofollow">in reason I do not accept the authority of the popes and councils, for they have contradicted each other—my conscience is captive to the Word of God. I cannot and I will not recant anythin" rel="nofollow">ing, for to go again" rel="nofollow">inst conscience is neither right nor safe. God help me. Amen. (as cited in" rel="nofollow">in Bain" rel="nofollow">inton, 1995) The Reformation would change Christendom forever. Luther's ideas would lead to the first truly revolutionary mass movement spurred on by prin" rel="nofollow">inted propaganda. Later works like John Calvin" rel="nofollow">in's "Christian Institutes" (1536) would further spread Reformation ideas. The events of the Reformation illustrate how technology has shaped history's turnin" rel="nofollow">ing poin" rel="nofollow">ints.