Question

What governance structures and systems failed and in what way?

“There is a need for regulation of our accounting profession. We cannot afford a system, like the present one, that facilitates failure rather than success. Accounting firms have public responsibilities. We have had too many financial and accounting failures…. While there are many facets of our system that need repair, the potential loss of confidence in our accounting firms and the audit process is a burden our capital markets cannot and should not bear” (Harvey Pitt, President of the US SEC).

In the wake of Enron Collapse A) While the statement above was made in the context of the US, it is equally true for many other countries, including South Africa.

Answer 1

Answer:

For the situation presented, the governance system that failed was the corporate government system which is primarily the activity of having a legitimate balance between the interests of various parties, for example, government, investors, stock holders , common public, suppliers, clients, senior administration officials, and numerous others. The instance of Enron is a typical example of how the individual greed of the top administrators can bring about the breakdown or collapse of a multi-million association. In the organization named Enron, the administration was not interested in developing an internal control framework that cod investigate the interest of the association. Be that as it may, all the top administrators were progressively interested in satisfying their very own personal greed at the stake of authoritative interests and this prompted the breakdown or collapse of Enron. This is principally because of the ineffectual corporate governance measures in the United States

This statement is valid for everywhere throughout the world as without the effective corporate governance system, the financial and corporate environment of any nation won't be straightforward and it will prompt the breakdown numerous worldwide firms and the directors will attempt to promote their self interests as opposed to working for the good the organization and the stakeholders .