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Egregious Business Behavior

Should hose whistle-blowers each have made more effort to be heard? How? In each of the case, there are whistle-blowers. For example, Carl Bass was a whistle-blower to Arthur Andersen. After ignoring by the partner David Duncan, he took no deep action to prevent the wrong-doing. The whistle-blowers advices or warnings are always Ignored, even though the whistle- blowers knew the problems and tried to prevent them. Actually, they could have made more effort to be heard.

For example, they could go the Board of Director, go out to the higher organization, go to the public, or even go to the media. All those might prevent the lost. Case: World (Pages 112 – 1 18) 1 . Describe the mechanisms that World’s management used to transfer profit from other time periods to Inflate the current period. World’s management transferred approximately $771 million from certain line expense accounts to a UP&E capital expenditure account. 2. Why did Arthur Andersen go along with each of these mechanisms?

There were driven by revenue They wanted to maintain World as a client There were arrogant by thinking they would be caught and punished conflict of interest, they felt more responsible to the client rather than the

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upholding their fiduciary responsibilities Not adhering to their internal controls 3. How should World’s board of directors have prevented the manipulations that management used? They need to Improve their Internal controls. 4. Bernie Beers was not an accountant, so he needed the cooperation of accountants to make his manipulations work. Why did World’s accountants go along?

Because they only want to get paid, not thinking about the results. They will do whatever the senior management wants them to do no matter if it is wrong. Working with Arthur Andersen shows that he didn’t make ethical decisions In the business, so the other accountants did not either. $408 million? Because they felt the money was used for buying shares back into the company. 6. How can a board ensure that whistle-blowers will come forward to tell them about questionable activities? The board can inform the whistle-blowers that coming forward will not hurt their employment or allow them to be victimized.

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