Discuss Elon Musk and Mark Zuckerberg and show how ethical values and culture played a role in the success or problem of the situation
Elon Musk and Mark Zuckerberg, as well as their companies Facebook and Tesla, are commonly assumed to be exemplifying the viability of the ethically sound approach to conducting business. At the same time, however, throughout the last decades, Facebook and Tesla have gone through a number of public scandals because of the apparent lack of understanding of what the notion of business ethics stands for, on the part of their founders.
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The most notable of these scandals had to do with the Facebook’s mishandling of personal information, collected from the network’s subscribed users, and with Musk’s 2018 fraudulent announcement that he had secured enough funds for turning Tesla into a private venture (Wells). What contributed the most towards triggering the mentioned developments is the stakeholder-oriented model of corporate governance, adopted by both companies.
After all, even though the adoption of this governance-model does help the company to promptly react to the newly emerged competitive challenges, this comes at the expense of delegating too much executive power to the company’s “charismatic” leaders. As a result, the likelihood for the affiliated organization to end up sustaining a blow to its public reputation increases rather substantially. Despite this particular consideration, Musk and Zuckerberg continue to exert much influence on the decision-making processes in Tesla and Facebook. The reason for this is that being heavily involved with IT, Facebook and Tesla are able to take full advantage of even the most recent technological innovations.
This would not be the case had the corporate governance paradigm in both companies been more shareholder-friendly. For Facebook and Tesla to be able to benefit from their adoption of the “authoritarian” and simultaneously stakeholder-friendly style of corporate management in the future, the pace of the ongoing technological progress must never slow down.
There are various organizations that play role in guiding the profession. Discuss each of them , how you think the interaction should be and which organization should be at the forefront leading the profession
There are a number of organizations on the mission of helping accountants to achieve professional self-actualization. Among the most notable of the former can be mentioned the Institute of Management Accountants, American Accounting Association, National Association of Certified Public Bookkeepers, National Association of Professional Accountants, National Society of Accountants and National Association of Certified Public Bookkeepers (Sharman 45).
The foremost objective of these organizations’ functioning is to advance the professional agenda, on the part of their members. Another important objective, in this regard, is to make sure that while addressing their professional responsibilities, accountants never cease being fully observant of the Generally Accepted Accounting Principles (GAAP). Finally, the listed organizations seek to increase the extent of their members’ educational attainment, as the main precondition for the concerned individuals to be deemed professionally competent. In my opinion, it is specifically the Institute of Management Accountants that should be at the profession’s leading edge.
The rationale behind this suggestion has to do with the fact that, unlike what it is the case with the rest of the mentioned accounting organizations, IMA places a heavy emphasis on encouraging accountants to expand their intellectual horizons. In its turn, this can be explained by the fact that the realities of a post-modern living presuppose that, in order to be considered professionally adequate, accountants must not only possess technical but also communication skills. As Sharman noted: “What is needed are professionals who can work in cross-functional teams” (47). Apparently, there is indeed an acute necessity for accountants to be able to think systemically while in the workplace: being required to function as a part of the team should help them to be emotionally and cognitively comfortable with the task.
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Do you think the profession and educational institution should shift its training and educational emphasis away from licensures and public accounting toward more holistic approach
I do believe that educational institutions should shift their focus from licensures/public accounting and adopt a holistic outlook on what the accounting profession is all about. The validity of this suggestion can be illustrated with respect to the fact that as of today, the very term an “accountant” is often seen synonymous to the notion of “fraud” (Sorensen, et al. 175). After all, the fraudulent accounting practices did play a major role in bringing about the outbreak of the 2008 financial crisis (Satava, et al. 271).
The reason for this is apparent. Prior to the concerned development, it used to account for a commonplace practice in colleges and universities to encourage students to focus on acquiring merely technical competence in the narrow field of their specialization, as the main indication of these individuals’ professional adequacy. As a result, many certified accountants were growing increasingly incapable of understanding the highly interactive aspects of the organization’s functioning.
Consequently, it proved impossible for many of these people to resist the temptation for committing a “victimless crime”. After all, for as long as a person remains preoccupied with addressing a deliberately narrowed set of professional tasks, he or she will be likely to assume that one can indeed get away with committing such a crime.
Therefore, the time has come for accountants to indulge in the holistic type of learning, as something that would help to enforce ethical behavior, on their part. There is, however, even more to it. Being required to apply a continual effort into gaining a holistic knowledge of the professionally relevant matters, accountants will be able to take an active part in defining the organization’s competitive strategy. As one can infer from the thematically relevant literature, it is specifically such their would-be ability that in the near future is going to be seen as the primary indication of these people’s high professional worth (Sharman 48).
Discuss Board Governance and the role of the accounting profession. (use article Models of corporate governance)
The actual axiomatic premise behind the introduction of the “board governance” concept has to do with the assumption that while operating in an unsupervised mode, the company’s hired managers will be naturally tempted to abuse their executive powers at the expense of shareholders (Larcker and Tayan 1). This, of course, calls for the establishment of a third-party governing body within the company, entrusted with the task of evaluating managerial performance on a periodic basis and ensuring that it is namely the interests of shareholders that define the company’s competitive strategy more than anything.
The two most popular models of board governance can be defined as shareholder-centric, on the one hand, and stakeholder-centric, on the other. The first one presupposes that the primary objective of every company’s functioning is to ensure shareholder returns. The second model is reflective of the assumption that a commercial entity operates primarily for the purpose of contributing to society’s overall well-being. Specifically, it is expected to create jobs (Larcker and Tayan 12).
Nevertheless, regardless of which particular governance model is in question, the role of accountants in ensuring its successful implementation can hardly be underestimated. The reason for this is apparent: when acting as auditors, accountants are the crucial element that safeguards the practical workability of the very concept “board governance”. This could not be otherwise, because it is up to accountants to keep the track of the company’s financial transactions, which in turn enables managers to apply timely adjustments to the deployed competitive strategy.
Is over-regulation hurting business in the US? (use article Sarbanes Oxley act: details and evaluation)
There can be very little doubt that over-regulation does hurt business in the US. The 2002 introduction of the so-called Sarbanes-Oxley Act (or “SOX”), which imposed a number of the previously unheard-of governance requirements on the US-based companies, exemplifies the validity of this suggestion. The initial rationale behind this legislation’s enactment was to reduce the instances of fraudulent accounting within the corporate sector.
There is still an ongoing debate about whether the Act proved to be even slightly effective, in this regard. What is clear, however, is that the concerned legal development did result in increasing audit fees rather substantially: “Audit fees… increased by an average 84% in 2004, following increases of 17% in 2003 and 34% in 2004” (Lane and Kulp 4). Consequently, this had a strongly detrimental effect on the commercial sustainability of just about every US-listed public company, especially the smaller ones. In the aftermath of the legislation’s enactment, many of the latter did not have any other choice but to file for bankruptcy.
Moreover, the adoption of SOX had set the economy on the path of outsourcing and eventual deindustrialization: “Companies, especially smaller businesses, are delisting from U.S. stock markets and moving to foreign exchanges” (Sharman 46). This is exactly the issue that the current US administration under Donald Trump is trying to address. Thus, it will only be appropriate to reconfirm once again that SOX did contribute towards undermining the vitality of the US economy from within.
Lane, David, and Susan Kulp. “Sarbanes-Oxley Act: Details and Evaluation.”
Larcker, David and Brian Tayan. “Models of Corporate Governance: Who’s the Fairest of Them All?” Rock Center for Corporate Governance, CG-11, 2008, pp. 1-32.
Satava, David, et al. “Ethics and the Auditing Culture: Rethinking the Foundation of Accounting and Auditing.” Journal of Business Ethics, vol. 64, no. 3, 2006, pp. 271-284.
Sharman, Paul. “Rebalancing the Accounting Profession.” The Journal of Corporate Accounting & Finance, vol. 18, no. 3, 2007, pp. 45-50.
Sorensen, Daniel, et al. “Developing and Measuring the Impact of an Accounting Ethics Course that is Based on the Moral Philosophy of Adam Smith.” Journal of Business Ethics, vol. 140, no. 1, 2017, pp. 175-191.
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Wells, Jennifer. “Elon Musk Has Been Reined In. So, Why Not Mark Zuckerberg?” The Toronto Star (Online). 2018. Web.