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Transcript of CASES:
AARON BEAM AND THE HEALTH SOUTH FRAUD
Which of the “obstacles” to moral behaviors do you see at work in Aaron Beam’s behavior and thinking? In Scrushy ?
Do you think that in Aaron Beam’s situation the “loyal agent’s argument” might have been valid?
Good intentions do not justify the means
Scrushys “dictatorship” attitude
He has the law on his back
a)Beam failed to notice the future consequences that might
bring to him and the company when he was pressured and awed by Scrushys
- it eventually starts commit fraud by moved some of the company’s start up cost from the
“expenses” column to the “capital investments” column
b)Beam continued using “aggressive accounting”
practices in financial reports of the company
- added revenue from the new locations was listed as revenue growth from the
company’s previous locations
- kept writing off unpaid receivables on the books as company “assets”
C) The company was negotiating a new credit agreement with a syndicate of 32 lenders from around the world the company would return to meeting analysts targets the following financial quarter like it had for the past 40 quarters by negotiating
d)Beam had disclosed the information needed and the information was sophisticated enough to investors in understanding the position of the company
Scrushy enjoyed all the luxuries of the lifestyle he afforded himself and
did not care too much about what he had to do to keep it Scruchy also tried to put the responsibility of the situation on Beam, which backfired and sent him down the hole much quicker.
Based on this case Aaron Beam is innocent in the moral responsibility of the incident for engaging in the aggressive accounting methods he used
Those who cooperated in Aaron Beam actions morally responsible for those action because they act of her own free will, not forced to act by some uncontrollable mental impulse or external force.
He responsibilities will mitigated in displacement of responsibility way for the engaging in the aggressive accounting and the changing the clinic reports to increase the company's earnings . Aaron can tell that Scrushy are the ones who are responsible for the fraud because Scrushy ordered Aaron to do what he did
Those who cooperated in Aaron Beam actions ,their responsibilities will mitigated if they make a statement that they only follow orders to do so
Richard Scrushy was morally responsible for the accounting fraud
NORHAYATI BINTI ISMAIL
NURUL AIN BINTI MUHAMMAD
ZUBIBILLAH BINTI AHMAD RAMLI
MUSDIANA BINTI MUSA
NUR ATIKAH BINTI ABDULLAH
DURRA BINTI IBRAHIM
can be defined as a practised in order to secure unfair or unlawful gain.
Aaron Beam is the main person who commit the fraud.
This is due to the pressure of being a worker of Richard Scrushy.
Richard wanted the financial report look better in the eyes of public and investors.
Richard instruct Aaron to make a move of some of the company’s startup costs from the “expenses” column
to the “capital investment” .
Aaron continue writing off unpaid receivables, he kept them on the books as company “assets”.
Aaron described the move to himself as “aggressive accounting” but definitely “not fraudulent”.
Stage of moral development would you place Aaron Beam:
the stage of moral development would I place Aaron Beam is level two.
This is according to Aaron Beam’s participation in the HealthSouth scandal he admits that his action were misleading and unethical.
Besides that, initially he justifies his participation only as “aggressive accounting “
and finally it is clear intimidation played a role in his decision to follow Scrushy’s order.
He portrays the behavior of stage three in the beginning of his involvement: Interpersonal concordance orientation.
Then, Beam start to fall into Stage Four: Law and order orientation,
when the fraud escalated into a more serious crime.
The stage of moral development would I place Richard Scrushy is level one.
Richard is like an individual who is charismatic, have boundless energy, and work like a dictator.
Even though, he can be describe brilliant but for me I believe that spectrum of intelligence can be perceived in many different ways
According to the Kohlberg, Scrushy may have been a brilliant businessman; however his moral development would be at a child’s level.
he refuses to take any responsibility of the situation.
Both parties are guilty:
Promoting employees in violation of the GAAP rules
Blindly follow the employer’s instruction even know it violation the GAAP rules.
Cheating by manipulated company’s financial statement
Bribing another employees to cheat with