Legality And Ethicality Of Corporate Governance

770 words - 4 pages

Legality and Ethicality of Corporate Governance
Corporate Governance is control mechanisms that keep management operating within the rules and regulations. Without corporate governance, management could start operating under their own guidelines which may or may not involve integrity, responsibility, or accountability. Publically traded companies are required to have some type of corporate governance in place since the scandals from Enron and WorldCom.
The case study that we are discussing is from United Thermostatic Controls. United has many different divisions and they are all decentralized according to their respected area. The southern division has been gradually decreasing in sales ...view middle of the document...

He is supposed to be looking out for the good of all stakeholders and at this point it looks like he is only worrying about the sales department. The auditing department has already noted that had these false sales not been recorded that they would not have met the sales budget and therefore it would directly impact the price of the stock. They are deliberately trying to keep the price of the stock from falling due to lack of profits. This would go against the SEC and SOX because the point is to prevent fraud from occurring. The accounting department has been strong armed into making the entries when they weren’t wanting to and now the audit department isn’t reversing it immediately. It appears that what will happen is the customers will decline delivery and the loss will be put into the new year and then the sale that does take place will be a wash. This would be considered fraud because they are playing the date game and assets. This is also unethical because the sales department and the accounting department and now even the auditor realizes what is actually going on. They are playing with the investor’s money and also defying the public by not disclosing the information that they know to be correct. The internal stakeholders will benefit but the external stakeholders are being...

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