Governance, ethics and integrity -

Running head: ETHICS AND GOVERNANCE
Ethics and Governance
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ETHICS AND GOVERNANCE1
Executive Summary:
One of the renowned energy based company in America, Enron was subjected to
bankruptcy in the year 2001 due to its account fraud. The Auditor who was enrolled for the
purpose of the auditing was hired by the company itself who successfully hid all the gaps in the
accountings. The debts were kept out of the scenario resulting in the company’s temporary
benefit. Later the fraud was detected by the investors and the shareholders and the consequences
were severe. The following report discusses about the ethical aspect of the Enron case study that
led to its decline with the help of the Egoism, Deontology, AAA model of business ethics and
FFF model of the business ethics as well.

ETHICS AND GOVERNANCE2
Table of Contents
Introduction......................................................................................................................................3
Application of Egoism and Deontological theories on the Enron Case Study:...............................3
Application of the AAA Model on the Enron Case Study..............................................................5
Application of the Ferrell, Fraedrich and Ferrell model on Enron Case Study:..............................8
Conclusion:....................................................................................................................................11
References:....................................................................................................................................12

ETHICS AND GOVERNANCE3
Introduction:
Enron was one of the most renowned Houston based American Energy, services and
commodity company which was founded in the year 1985 as the collaboration of the InterNorth
and Houston Natural Gas company. In the year 2001 it was revealed that the Enron Company has
planned for an accounting fraud which led to the downfall of the company and the company was
lead to the bankruptcy. In the following report we will discuss how the application of the Egoism
and Deontology theories relates to the Enron case study (Boddy, 2017). The AAA model and the
Ferrell, Fraedrich and Ferrell model application on the Enron case study is given here as well.
Application of Egoism and Deontological theories on the Enron Case Study:
Egoism is one of the very common terms used in Ethics. Here, a person is unable to make
any moral judgments and works for his or her own self-interest. The persons’ moral values
changes and works only for fulfilling his or her desires. The Ethical egoism is broadly classified
into three categories and they are known as Personal Egoism, Individual Egoism and lastly the
Universal Egoism.
At present, the term Enron is used to describe chaotic business situations or corruption.
And the company has earned this fame all by itself. As the company has received a considerable
amount of fame and industrial status within a very short span of time, to maintain that image,
they decide to hire such audit team which will hide the gaps in the business such that the
investors remains in a dilemma that the status of the company is intact (Bhaskar & Flower,
2019). This act is the sign of the Personal egoism depicted by the company to maintain its self-
respect.