Corporate Greed Scandals

Over the recent decades, accounting-related corporate scandals have contributed to considerable economic and financial problems on the global platform. Among the most conspicuous factors that have led to the scandals include dishonesty, greed, misrepresentation of figures, and conspiracy. The primary role of the accounting profession is to transform operational data into financial information. However, it has metamorphosed into an integrated management discipline rather than the traditional technical activity; thus, opening it up as a subject of different ideologies. The numerous corporate scandals are an indicator of the impact of the adoption of creative ways, which has led to the tarnishing of financial values and the manipulation of performances. The paper will examine the proliferation of corporate scandals from a biblical perspective with the aim of establishing ethical decisions and practices that future leaders can adopt to avoid looming crises.



Enron was a company in the energy sector based in Houston, which is associated with the most infamous global accounting scandal that led to its bankruptcy in 2001. According to Jennings, the company had obscured considerable debt off its financial statements, and the revelation resulted in an implosion, which resulted in the loss of shareholder funds totaling $74 billion and the jobs and pensions of thousands of the companys employees. Besides, the companys auditor Arthur Andersen collapsed. Sheroon Watkins is credited as the whistleblower in the scandal whose main players were the companys previous and existing CEOs Ken Lay and Jeff Skilling.

In 2002, Tyco International was involved in a corporate scandal, which implicated its top executives who were siphoning hundreds of millions of dollars out of the company that manufactured healthcare, safety, and electrical equipment. The officials used the money to finance their lavish lifestyles. For instance, Tycos CEO Dennis Kozlowzki purchased many houses, a $6,000 shower curtain, and threw a $2 million party for his wife. Tycos executives were prosecuted and handed 25-year prison terms.

Another major corporate scandal involved WorldCom, a telecommunications corporation that now operates as MCI, Inc. In 2002, the companys internal auditor uncovered fraud, which eventually led to the discovery that the company had inflated its assets by about $11 billion. The companys CEO Bernie Ebbers was the leading player and had actualized the scandal by underreporting line costs through capitalizing instead of expensing them; thus, inflating the companys revenue with the falsified entries. Consequently, investors lost $180 billion and 30,000 individuals lost their jobs. Ebbers was found guilty of filing false documents, conspiracy, and fraud and was sentenced to 25 years in prison.

In 2003, Freddie Mae, which is a mortgage-financing entity that is funded by the federal government was caught up in a scandal. Jennings, states that a SEC investigation revealed that the organizations executives had intentionally understated and misstated earnings, which totaled to $5 billion. Consequently, the organizations COO David Glenn, former CFO Vaughn Clarke, and CEO Leland Brendsel were fired and fined $125 million.

The Bernie L. Madoff Investment Securities LLC, which was an investment firm based in Wall Street. Its founder Bernie Madoff had tricked investors through a Ponzi scheme and defrauded them out of about $65 billion. Madoff had bragged about the scheme to his sons who reported him to the SEC. The main culprits in the corporate were Madoff and his financial officer and accountant Frank DiPascali and David Friehling respectively. They would pay investors using their money or that obtained from other investors instead of profits to keep the scheme going. Madoff was found guilty and handed a lengthy prison term. The scandal was reveal at the onset of the 2008 global financial crisis.

Another scandal that rocked the United States financial industry in 2008 involved the Lehman Brothers Holdings, which was an international financial services company. According to Jennings, the discovery of the scandal followed the firms declaration of bankruptcy. At the time, Lehman Brothers was the fourth largest investment bank in the country. The scandal involved the hiding of loans valued at $50 billion and disguising them as sales. The companys top executives had collaborated with the companys auditor Ernst & Young to sell toxic assets to banks in the Cayman Islands with a prior understanding that it would purchase them back; thus, creating an illusion that the company had more cash than it held. The SEC did not prosecute persons involved in the scandal that led to the largest bankruptcy in the country due to insufficient evidence.

Recent accounting scandals involve the likes of Turing Pharmaceuticals Martin Shkreli, FIFAs Sepp Blatter, and Volkswagen Dieselgate. According to Matthews and Gandel, the scandals were not as massive as those of Enron and Madoff, they are especially fascinating as Shkreli demonstrated defiance on social media, and Volkswagen even ran advertisements portraying its engineers as angels while its officials were developing an elaborate plan to lie to the public and circumvent pollution controls.

The State of Accounting Practices

The primary objective of any business entity is to create wealth. However, the capitalist idea of profit often receives bad press due to equating profitability to corporate greed. Wong and Rae, state that Pacioli who was an accounting theoretician and a theologian considered profit as acceptable as long as an entity participated in a legal business, the profit was within a reasonable level, and the profit motive was not the only business goal. Different biblical teachings portray good profit as a reward for obedience and frown upon wastefulness, unproductivity, and laziness, which are viewed as selfish and a prerequisite to the destruction of a person.

Currently, accounting has developed into a sophisticated management technique. It does not only focus on recording business transactions, but it is a critical component to the pursuit of the objective of creating wealth by management. From a biblical perspective, leadership or managerial roles are considered a position of responsibility, which requires one to oversee other peoples property as it is evident in the parable of the talents. Therefore, corporate executives have to be accountable for their actions in the allocation and use of resources. The transformation of the accounting function has placed an enormous responsibility and a critical role in the fulfillment of the wealth creation goal of business organizations.

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In the accounting profession, the values, ideas, and practices of the management affect the organizational climate. Pacioli comments on ethics and refers to the biblical concept, which suggests that lazy persons should desire the productivity and wisdom of the ant. The reference of the ant is an attempt to align the accounting to the truth and not as a function to advance false information. It is important to note that it is often difficult to observe the high standard of ethical behavior that the accounting profession requires. However, such situations demand compliance with the codes of conduct that outline how an accountant should act regarding integrity, professional competence, confidentiality, and objectivity. Although they outline frameworks that guide professional actions, individuals will interpret and make decisions based on the value perceptions, training, and experiences. Consequently, the application of ethics in the accounting context requires that the actions of professionals should be acceptable to the public.

Accountants should act in an ethical manner to disclose relevant and truthful accounting information in financial reports. According to Malloch and Mamorsky, the management of ethics in corporate organizations is based on a rules-based structure, which makes it difficult for accountants to work in a values-based way because it is easy to prescribe rules but not values. Accountants need to rely on certain ethical standards to represent credible information for the benefit of all stakeholders. Ethical behavior should be founded on what they consider morally right or wrong by not only complying with rules and regulations but also making sure that the stakeholders have confidence in the information they produce. Accountants act as the overseers of their entities operations, performance, and financial reporting by observing Pauls suggestion in the Bible that a leader or steward should be above reproach. An ethical accountant should demonstrate integrity, sincerity, and honesty.

The Future of Ethical Accounting

The corporate greed demonstrated by the numerous scandals emphasizes the need for ethical accounting. Ethics is a significant issue in accounting as it is difficult to eliminate greed. For instance, a lax ethical framework is a primary reason for the development of the Enron scandal. Conversely, Madoff perceived financial fraud as a victimless white-collar crime as no one was physically harmed. Also, some of the scandals are attributed to the ignorance of some accountants who did not keep up with the changing regulatory framework.

Most unethical actions in accounting involve fraud and cheating. Cafferky, states that most accounting scandals start with the falsification of accounting and other management records, and the most complex ones such as the illegal financial schemes required collusion. Individuals who cheat attempt to live above certain rules. The presence of cheating indicates other entities obey the set rules, but one of them is trying to gain an unfair advantage. Issues that may arise from such deception in the accounting and finance field include insider trading, mortgage banking lapses, and back-dating stock options. These deceptive actions are also in violation of different state and federal laws, which implies that they are criminal activities.

Persons who commit fraud exploit legal lapses and are driven by greed. They usually pursue opportunities that will result in personal gain and hope that their actions will remain undiscoverable . Alternatively, other persons such as Bernie Madoff may build their entire business around a fraud and take advantage of people in a systematic way.

A majority of individuals who commit fraud are often undergoing financial pressure or may have aggressive performance goals in which they perceive failure as unacceptable. Jennings, states that the pressure often leads to behavioral characteristics that demonstrate stress. Some of the stress indicators that are associated with people with a high risk of committing fraudulent acts include: living beyond someones means, financial difficulties, unusually close relationships with customers, family problems, unwillingness to share responsibilities with others, irritability, addiction issues, and suggesting unrealistic money-making schemes.


The prevention of the white-collar crimes associated with the accounting profession requires a good understanding of law and ethics. However, it is noteworthy that the emphasis on following legal frameworks and professional codes of conduct has not led to a decline of executives facing prison sentences and hefty fines due to their violation. The huge cost of debt among working professionals and new students is a major factor that contributes to financial issues that often lead to the adoption of deceptive practices or fraudulent activity. From a biblical perspective, dishonest accounting practices and fraud go against the ethical standard of commitment. Individuals take a short-term outlook and disregard the responsibilities present in the relationships created with different stakeholders in an entity; thus, prioritizing on self-interest. Pursuing personal gain reflects that an official wishes to benefit from the relationship rather than pursue common goals.