Free «Tyco’s Unethical Practices» Essay Sample

What was the nature of the controversy regarding this company FFFD’s practices?

Between 1992 and 2002, when Dennis Kozlowski was the CEO of Tyco, the company indulged in unethical accounting practices. It had governance issues and was marred with multiple frauds. The amount that was lost during the leadership of Kozlowski amounted to more than $150 million (MacDonald, 2002).

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How were accounting practices involved?

Under the leadership of Dennis Kozlowski, the former CEO, the company was embroiled in an accounting controversy involving receipt of $81 million from unauthorized bonuses, purchase of an art worth $14.725 million and unsubstantiated payments to Frank Walsh (former director of Tyco) worth $20million (Standard and Poor's Corporation, 2007).

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If you had been an accountant for this company, how would you have acted? Explain why.

Working as an accountant requires obeying the rules and regulations of the company under the Employee Act and according to International Accounting Standards. This means that one has to obey the decisions made by the senior officials of the company. However, every occupation has a description of the code of ethics, which distinguishes various occupations. As an accountant, I would have acted in my capacity with the work given to me under the mandate of my superior. In case, if I realize that things are not moving according to the required practicing codes, I will resign. My resignation will protect my values as a professional accountant apart from saving the company from fraud.

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What might have been done to prevent the controversy?

One way of preventing the controversy is through audit. The company should invite outside auditors who will give a report of how the company is faring. Additionally, the company has to review the powers of the CEO, where any decision should have a backup from other board members, and some junior staff representatives.

What was the affect of unethical behavior on the profitability of the company?

Unethical behavior had a significant impact on the profitability of Tyco International Limited. Since its foundation, the company recorded increasing revenues until the 2002 scandal that greatly affected future revenues. This led to a considerable reduction in the profit of the company (Tyco, 2012). 

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