From the moment computer was invented, a drastic change occurs to the existence of every human being.

 Thanks to the individuals who devoted their lives for the advancement of humanity, the simple instinct and drive of an individual for survival which consist of a food to eat, a clothes to wear and a house to live evolves and became a complicated and multifaceted way of living.

Nowadays, technology especially computers plays a vital role for the advancement and survival of businesses. With an increasing knowledge about computer’s software, hardware and information system, a company business processes became more effective and efficient. A need to safeguard assets and information arises due to numerous threats and significant risk in which a company faces at this day.

Information security was established for the protection of information and information systems from unauthorized access, use, disclosure, disruption, modification or destruction. It ensures that only authorized users (confidentiality) have access to accurate and complete information (integrity) when required (availability).

The CIA triad of confidentiality, integrity, and availability is at the heart of information system. It is interchangeably referred to in the literature as security attributes, properties, security goals, fundamental aspects, information criteria, critical information characteristics and basic building blocks.  Also, it is increasingly being recognize as the de facto standard for strengthening the effectiveness and awareness of cyber security.

 In information security, confidentiality means protecting information from unauthorized individuals, entities or processes. Information has value, especially in today’s world. The disclosure of information to inappropriate individuals can result from a range of minor damage to a great loss.

Encryption is a method used in protecting information confidentiality. It is a process in which usable information transforms into a form that renders it unusable by anyone other than an authorized user. Other ways to ensure confidentiality include enforcing file permission and access control list to restrict access to sensitive information.

Information only has value if it is correct. Data integrity means maintaining and assuring the accuracy and completeness of data over its entire life-cycle. This means that data cannot be modified in an unauthorized or undetected manner. Hashing the data you received and comparing it with the hash of the original message is the common technique in ensuring data integrity.

Availability of information refers to providing authorized parties to access information when needed. Information possess value only if it is used at the right time.  Backup plan is vital to ensure data availability and business continuity during planned or unplanned disruptions that affect normal business operations.

CIA triad is an important step in designing any secure system. However, there is a continuous debate about extending this classic trio. In 2013, Information Assurance and Security (IAS) literature proposed an extension to the CIA-triad and called it IAS-octave. It comprise of Confidentiality, Integrity, Availability, Accountability, Auditability, Authenticity/Trustworthiness, Non-repudiation and Privacy.

Enron, and Arthur Andersen, once possessing prestige name in the world, becomes an ash of history in an incident that wavers the world of business.

Once the seventh largest company in America, Enron was formed in 1985 when InterNorth acquired Houston Natural Gas. The company branched into many non-energy-related fields over the next several years, including such areas as Internet bandwidth, risk management, and weather derivatives (a type of weather insurance for seasonal businesses). Although their core business remained in the transmission and distribution of power, their phenomenal growth was occurring through their other interests. Fortune Magazine selected Enron as "America's most innovative company" for six straight years from 1996 to 2001. Then came the investigations into their complex network of off-shore partnerships and accounting practices.

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Enron didn’t start as unethical business. As we have seen in the case study, what introduced the virus was the pursuit of personal wealth via very rapid growth.

Great vision for the company’s growth is indeed a significant recipe towards achieving organizational success. However, it has to keep in mind as always that vision without clear and congruence to goal puts one’s business to oblivion. That’s what Enron Company has disregarded. The management, envisions the company of creating a business based on a broadband network which could supply and trade bandwidth. With primarily being the natural gas producer, they tend to mix the industry to indifferent, not in line venture; and the result, the expansion turned bad because of inadequate administration and the contracts were not met.

 Hard driving culture was fortified by incentive schemes which promised, and delivered, huge rewards in compensating packages to outstanding performers. The result was that, to achieve results, aggressive accounting policies were introduced from an early stage. This premise produces two distinct faces to which conclusion is drawn. First, an incentive to employee is implemented to encourage employee to achieve organizational goal. It is powerful motivator, and yet can be the greatest foe if does not regulate considerably. In unfavorable circumstances, high regards with incentive scheme causes employee to exert forces outside their limit and in most cases even to outlaw existing policies just to attain rewards and recognition. The main point of this, incentive scheme is a must if the organization needs motivation; provided that it is given with just and considerably proportionate to employees’ worked. The second argument is the use of aggressive accounting. As we have searched, aggressive accounting (also known as creative accounting) is the use of accounting knowledge to influence the reported figures while remaining within the jurisdiction of accounting rules and laws, so that instead of showing the actual performance or position of the company. According to our understanding, it is legal. It raises us two questions in our minds. One is that how come the method (aggressive accounting) becomes the fire that leads to the downfall of Enron if its use still lies within the jurisdiction of legality? Also, it concerns us about the ethical constraints of using this method.

Enron’s collapse leads to downfall of one of the largest accounting firms in the world, Arthur Andersen. As we all know, external auditors play a vital role in enhancing the credibility of the client firms in the eyes of investors. This is only true as long as investors are satisfied that these auditors will not collude with the firms they audit. The possibility of collusion leads firms, investors, and auditors to modify their behaviour. This is what Arthur Andersen had neglected. They deemed to have so compromised its professional standards in its dealing with its client Enron that it was in many ways complicit in Enron’s criminal behaviour.

This scandal caught the attention of the world, particularly the authoritative body of America. As a result, one of the known bills, in presenting the financial reports, was passed in the US Congress – the Sarbanes-Oxley Act.

Sarbanes-Oxley Act of 2002 also known as Sarbox or SOX is a legislation passed by US Congress to protect general public from accounting errors and possible fraudulent practices of the enterprise as well as improve the accuracy of the corporate disclosures. The bill also contains a number of issues such as Enron and Worldcom. The act covers issues such as auditor independence, corporate governance, and internal control assessment. Studies and reports include effects of consolidation of public accounting firms, the role credit rating agencies in the operation, securities violation and enforcement and actions, and other manipulative financial conditions.

The SOX take action to fraudulently influence of the corporate governance in the entity. On the other hand, it also prevents misleading financial statement regarding the actual performance of the company. The most difficult part of the mandate is the required independent audit of some public companies despite the initial cost of internal control. Despite the fact that companies would shoulder cost, it can also give benefits such as assessing internal control and improvement in the internal control practices.

The great dealing of the issue is not just the accuracy of the financial statement but also the loss of trust in the public entity as a whole. Meanwhile, there will always be upfront concerns in terms of the regulation of the reporting and disclosures which lead to important building of opportunities in measuring the cost-benefit analysis.

The SOX act has been praised for nurturing an ethical culture as it forces top management to be transparent and employees to be responsible for their acts whilst protecting whistle-blowers.

Lastly, Enron scandal reminds us that even high-end company is in danger of chaotic downfall if administration of the company was consume by greed in personal wealth and pursues their self-interest . Moreover, Sarbanes-Oxley still inspires dear in board and top executives – of enforcement actions, of the stock market’s reaction to a deficiency, and of personal liability. Fear can be a powerful generator of upstanding conduct. But business runs in discovering and creating value.

lighting of the torch

Off to a glittering start, the 24th Accountancy Week was indeed the event of the year for Accountancy students in Polytechnic University of the Philippines (PUP).

The event started with the traditional Grand Parade where competing teams vying to be the best team show off the best qualities that represent each of their teams. BRAVE: Scaling New Heights, each team represent birds as a symbol of their group.

BSA 4-11 was part of Team Eagle, dubbed as The King, the mightiest of all and the best.

The Grand Parade ended in the Freedom Park where all Accountancy students huddled around while the balloon flying and lighting of the torch signified the start of the week-long celebration of the Accountancy Week.

balloon flying

I hope we can say much about how surreal and how nostalgic the event was, but on the contrary, it didn't feel much of a celebration to us, we don't know if it's because of the lesser population, or because we didn't participate in the preparation  that much compared to last year, or because we have a lot going on right now that having fun is the least of our priorities or it's just really not fun at all but nevertheless, we still tried to find time to be happy. #Hugot

It's fun to be part of the Grand Parade with your friends for the last time...

It's fun to be out under the scorching sun during the parade for the last time...

It's fun to witness the balloons flying in the sky for the last time...

It's fun to see the furnace of the torch burning for the last time...

It's fun to smile and crack jokes with your friends during the parade for the last time...

and it's fun to be an Accountancy students celebrating Accountancy Week for the last time...

because the next time we celebrate Accountancy Week...

We will be reviewing for the board exam. let's be realistic, we can't be accountants by July 2017 just yet, or if we already are, aba! ang jirbax naman!

by: Rommel Agnes and Joan Kirsten Purisima