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Chapter 13: Problem 13

Which statement is the most accurate? a) The honesty of our corporate leaders is beyond question. b) Most corporate leaders are dishonest. c) Even if a corporation "cooks" its books, the CPA firm it hires to audit its books will quickly find out and blow the whistle. d) Enron was not the only American corporation in recent years to be guilty of corporate misconduct.

Short Answer

Expert verified
d) Enron was not the only American corporation in recent years to be guilty of corporate misconduct.

Step by step solution

01

Evaluate Statement A

Statement A asserts that the honesty of corporate leaders is unquestionable. It is a very strong statement implying that there is never any doubt about the integrity of corporate leaders. In reality, no individual or group can be completely exempt from suspicions of dishonesty. There will always be exceptions, and it is important not to generalize. Therefore, Statement A is not accurate.
02

Evaluate Statement B

Statement B claims that most corporate leaders are dishonest. This statement is also a generalization, implying that the majority of corporate leaders engage in dishonest activities. We should be cautious about making such sweeping generalizations because there are always exceptions, and such a statement can be misleading. Sure, there may be some dishonest corporate leaders, but we cannot assume that most of them are dishonest without evidence. So, Statement B is not accurate.
03

Evaluate Statement C

Statement C maintains that even if a corporation falsifies its records, the CPA firm auditing the company will quickly discover the fraud and report it. While it is true that CPA firms are supposed to conduct thorough audits and detect any discrepancies or fraud, it does not imply that they will always succeed in doing so. There have been instances where auditors overlooked or even collaborated with corporations in hiding fraud, as seen in the Enron scandal. Therefore, Statement C is also not entirely accurate.
04

Evaluate Statement D

Statement D states that Enron was not the only American corporation in recent years to be guilty of corporate misconduct. This statement is true. Enron was not an isolated case, and there have been other instances of corporate misconduct in recent history. Several high-profile corporate scandals involving companies like WorldCom and Tyco have occurred in the past, demonstrating that corporate misconduct is not unique to Enron. As a result, Statement D appears to be the most accurate of the four options. In conclusion, based on our analysis, the most accurate statement is: d) Enron was not the only American corporation in recent years to be guilty of corporate misconduct.

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