The Fall of Enron-An Analysis of Ethical Issues

Running head: ETHICAL DILEMMA OF ENRON
ETHICAL DILEMMA OF ENRON
Name of Student
Name of the University
Author Note

ETHICAL DILEMMA OF ENRON1
Executive Summary
Ethical activities or behaviours refer to all those activities of individuals that are in
accordance with the social norms and also in accordance with different ethical principles.
Organizations are required to behave in an ethical manner and are required to take into
consideration the triple bottom line while carrying out their activities in order to become
successful in the long run. The company selected for the purpose of the study was Enron. The
main objective of the paper was to discuss about the unethical activities at Enron. The paper
therefore discussed about the different ethical theories, application of the AAA model of ethical
decision making and also the showed the application of the Ferrell, Fraedrich and Ferrell model
in the case of Enron.

ETHICAL DILEMMA OF ENRON2
Table of Contents
Introduction..........................................................................................................................3
Discussion............................................................................................................................3
Part A: Contrast between the ethical theories of egoism and deontology and application
of the same to the case of Enron..................................................................................................3
Part B: Application of the AAA model that should be used by accountants for the
purpose of obtaining an ethical decision making........................................................................6
Part C: Application of the Ferrell, Fraedrich and Ferrell model in the case of Enron.....8
Conclusion.........................................................................................................................11
References..........................................................................................................................11

ETHICAL DILEMMA OF ENRON3
Introduction
Ethical dilemma refers to a problem of decision making where there are more than two
alternatives and none of the alternatives are morally acceptable. Moreover it includes situation of
conflict where if an individual goes for one particular alternative it results in transgressing
another alternative. Therefore in this respect it is necessary to understand the different ethical
theories such as deontology and also that of ethical theory of Egoism. An ethical behavior
includes behaving in accordance with the socially accepted values and also includes respecting
moral principles of honesty, integrity, equality, dignity and similar others. Further there are
certain fields of study which require compliance with certain guidelines for the purpose of
conducting ethical activities (Sims & Brinkmann, 2003). The company selected for the purpose
of this study includes Enron Company. Enron is one such company based in US that had been
engaged in unethical activities or behavior and also failed to comply with the accounting
guidelines. The main aim of the paper is to identify and discuss about unethical behavior and
also the guidelines that Enron was required to follow. The paper will discuss about the ethical
theories of Deontology, Egoism, application of the AAA model by the accountants and also
includes- making application of Ferrell, Fraedrich and Ferrell model.
Discussion
Part A: Contrast between the ethical theories of egoism and deontology and
application of the same to the case of Enron
The theory of egoism is based on the principle that everyone should act for their own
self-interest. The ethical theory of egoism can further be understood from three main
perspectives- individual, personal and also universal. The PERSONAL ETHICAL EGOISM is