VW Emissions Scandal Essay

This essay examines the Volkswagen emissions scandal, focusing on the ethical and accounting implications of the company's actions. It details how Volkswagen manipulated emission tests using illegal software, resulting in significantly higher nitrogen oxide emissions than permitted. The essay analyzes the roles and responsibilities of various stakeholders, including top management, the German government, and accountants. It highlights the ethical failures of Volkswagen's management, prioritizing profit over environmental responsibility and societal well-being. The essay also discusses the damage control strategies employed by the German government to mitigate the negative impact on the reputation of German industry. Finally, it emphasizes the importance of internal and external accounting functions in identifying and preventing such scandals in the future. The essay concludes by stressing the need for stronger ethical business practices and greater corporate accountability.

Accounting in Society

ABSTRACT
Accounting of society is determined that how an organization manages different business
operations by considering their impact on society. In this regard, two areas that have risen in
prominence in recent years are the role of accounting in macroeconomic management and in
environmental issues and climate change. In addition, this concept also plays extra attention
ethical business practices and responsibility of business towards public and environment. This
essay has carried out detail investigation of different aspect of VW scandal. This assessment has
found that Volkswagen has manipulated carbon emission taste by using illegal software which is
allowing its diesel cars to produce up to 40 times more Nox as compared to government norms.
In this regard, top managers of Volkswagen have been addressed as most responsible individual
in this scandal. This is because they have allowed this manipulation in order to enhance
profitability of company. Apart from that it has evaluated that German government has played
important role to control damage from scandal.

TABLE OF CONTENTS
Essay................................................................................................................................................4
Introduction......................................................................................................................................4
Main body........................................................................................................................................4
Conclusion ......................................................................................................................................6
Reference.........................................................................................................................................7

ESSAY
INTRODUCTION
Accounting for society determines the responsibility of an organization towards particular
society or general citizen. In this process, the evaluation of different management practices is
carried out with reference to wide range of business ethics as per the current market trends.
Furthermore, it has been evaluated that that the business entity formulates several strategies as
per the different business requirement so as management has to consider wide range of ethical
norms in order to protect the interest of society (De George, 2011). The essay is going to analysis
different aspect of VW scandal. The company has admitted about manipulating emissions test
data on its diesel vehicles in the US and Europe. The present is going to analysis different
elements that influence this scandal.
MAIN BODY
Identification of problem
On 18 September 2015, the US Environmental Protection Agency (EPA) has claimed that
Volkswagen (VW) had applied illegal software for cheating emission tests. It can be considered
as unethical practices and created negative impact on environment. This is because illegal
software is allowing its diesel cars to produce up to 40 times more Nox as compared to
government norms. In this situation, business entity has ordered to recall around 482 000 VW
and Audi cars sold in the US since 2008 (Vehicle emission tests: beyond the VW case, 2015).
Furthermore, VW indicated this software may have been installed on 11 million of its diesel
vehicles worldwide. In addition to that Martin Winterkorn, Volkswagen's CEO, has apologised
and resigned three days later. Furthermore, it has been evaluated that VW could face a fine of up
to US$18 billion along with several legal action from customers and shareholders, etc. Apart
from those government authorities of Germany, France, Italy and South Korea have reportedly
opened investigations into VW cars sold there in order to assess variations in carbon emission
from diesel cars of VW with reference to their standards (Resnik and Tinkle, 2007). In this
scandal, different individuals have played distinct role and responsibilities such as top
management, government authorities, accountants etc.
Analysis of 4 areas identified
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By analysing several facts of VM scandal, it has been evaluated that top managers of
company has actively participated in scandal. In this context, former boss of company, Martin
Winterkorn have accepted that they have avoided ethical norms while considering the interest of
company. Therefore, it can be stated that top managers of company are fully responsible for this
scandal (Beauchamp and Arnold, 2004). This is because company has ignored the warning of
German engineering firm Bosch. In this context, it has been evaluated that Bosch has determined
that the manipulation of road tests would be illegal. Therefore, it can be stated that manipulation
of emission test has led negative on environment. In this regard, it has been evaluated that the
Volkswagen sales in America was dropped by 24.7 percent in November as compared to the
same month in 2014. The drop, from 31,725 to 23,882 cars, is the latest blow in the ongoing
disaster that is VW’s diesel scandal. This is identified as a clear sign of the undoubtedly crucial
damage that could be face by VW in US (Diesel scandal will wipe out VW for at least two years,
2015).
The German government is played important role for managing the damage control. In
this process, the public authorities of Germany had painstakingly applied a damage control
strategy in which government is carried out an effort to prevent the VW scandal from damaging
the reputation of German industry as a whole (Mei-qin, 2007). Therefore, the Top advisors to
Foreign Minister Frank-Walter Steinmeier had even written a confidential letter to German
diplomats in all over the world for facilitation of appropriate guidelines for defending "the
Germany brand." In this process, the emissions scandal is going to be presented as a singular
occurrence. Therefore, it can be stated that the public authorities of Germany have tried to reduce
the impact of scandal on goodwill of germen industry by protection of VW (Storbacka, 2012).
Accountants of company have warned that Car manufacturer Volkswagen’s manipulation
of diesel emissions tests in the US and Europe could potentially impact UK cars and have a
knock-on effect on the taxation of company car benefits. In this regard, it has been evaluated that
Company car benefits are evaluated that are based on the list price and the approved CO2
emissions of the car as well as a 3% supplement for diesel cars. In this regard, it has been
evaluated that revision of CO2 emissions figures has resulted the investigations which are carried
out by US and German authorities (VW scandal: Accountants warn over company car emissions,
2015). In addition to that it has been analyzed by accountants that Volkswagen has to manage the
cost of €32bn to €35bn as a result of scandal over rigged emissions tests, according auto industry
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analysts. Further, UBS's experts are estimated the total bill for legal costs, settlements with
regulators, recalls to modify engines and vehicle buybacks will hit €35bn with in next two years.
These elements have hampered the performance of company (Diesel scandal will wipe out VW
for at least two years, 2015).
The management of company has paid extra attention profit rather than protection of
environment so as business entity is responsible for avoidance of ethical business operations.
This approach also hampers Volkswagen's accountability towards society. This is because it is
one the leading car manufacturing brand so as goodwill of company has been greatly influenced
by manipulation of emission testing software through illegal software. In order to predict these
kinds of situations again, the management of each organization has to carry out timely internal
and external audit through which different stakeholders of company are able to monitor different
management operations under the ethical norms. Apart from that it has been evaluation that
unethical business practices have enhanced the expenditures of company.
Internal and external accounting functions have played important role for determination
of roles and responsibilities of different individuals associated with particular scandal (Gelinas,
Dull and Wheeler, 2010). In this process, internal accounting provides significant assistance in
determination of social responsibilities of company as per the different management practices. In
similar way, external accounting is considered as a most important approach for assessment of
different kinds of irregularities within business entity that could be carried out by public
authorities, external auditors and pressure group. On the basis of this information, management is
able to predict roles and responsibilities of company towards environment and different
stakeholders along with scandals.
CONCLUSION
As per the above assessment, it can be concluded that Volkswagen scandal is not the
behavior of the corporate executives involved in approving the use of defeat devices around the
world but lying and cheating with people's trust toward company. This scandal has hampered
the image of company as a developer of green vehicles. In this context, it can be concluded that
many of the Volkswagen’s competitors have also been involved in such kind of regulatory
sleight but nobody have expects Volkswagen to be the last car company who have avoided
environmental safety or restrictions in order to enhance profit. This report has found that top
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managers of company are having major responsibilities towards of ethical business practices and
formulation of different business practices associated with accounting of company towards
society.
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REFERENCE
Journals and Books
Beauchamp, T. L. and Arnold, D. G., 2004. Ethical theory and business. Oxford University
Press.
De George, R. T., 2011. Business ethics. Pearson Education India.
Gelinas, U. J., Dull, R. B. and Wheeler, P. R., 2010. Accounting Information Systems. 9th ed.
Cengage Learning.
Mei-qin, Q.I.A.N., 2007. Rational thinking on build a harmonious society of social responsibility
accounting. Economic & Trade Update. 9. pp.009.
Resnik, D. B. and Tinkle, S. S., 2007. Ethical issues in clinical trials involving nanomedicine.
Contemporary clinical trials. 28(4). pp. 433-441.
Storbacka, K., 2012. Strategic account management programs: alignment of design elements and
management practices. Journal of Business & Industrial Marketing. 27(4). pp. 259–274.
Online
Diesel scandal will wipe out VW for at least two years. 2015. [Online]. Available
Through:<http://www.telegraph.co.uk/finance/newsbysector/industry/engineering/
11917034/Diesel-scandal-will-wipe-out-VW-for-at-least-two-years.html>. [Accessed on
17th December 2015].
Vehicle emission tests: beyond the VW case. 2015. [Online]. Available
Through:<http://www.europarl.europa.eu/RegData/etudes/ATAG/2015/568355/
EPRS_ATA(2015)568355_EN.pdf>. [Accessed on 17th December 2015].
VW scandal: Accountants warn over company car emissions. 2015. [Online]. Available
Through:<http://www.taxjournal.com/tj/articles/vw-scandal-accountants-warn-over-
company-car-emissions-08102015>. [Accessed on 17th December 2015].
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