Lawsuits and criminal charges against senior managers, the boards of directors, and the auditors were inevitable as a way of punishing guilty individuals and recovering any damages proven to have been caused by the accounting misstatements.
By developing ethical corporate cultures based codes of conduct in place to provide guidance, training to provide awareness, and understanding, monitoring to assure compliance, and rewards or sanctions to reinforce the desired behavior. Also, the top executives should set the best example possible.
Four things the CEO and other member of top management can do to emphasize the importance of integrity and ethical values among all personnel are (1) setting the tone by example, (2) communicate to all employees that the same is expected of them, (3) provide moral guidance to employees who may be ignorant regarding what is right and wrong, and (4) reduce or eliminate incentives and temptations that might lead individuals to engage in dishonest, illegal, or unethical acts.
QUESTION 1: Should executives and directors be sent to jail for the acts of their corporations employees?
QUESTION 2: Why is it important for the clients of professional accountants to be ethical?
QUESTION 3: How can corporations ensure that their employees behave ethically?