Think of a recent business fraud or scandal you have heard about in the news, or choose one that has been mentioned in your reading. For example, you might consider one of the following:
The Volkswagen emissions falsification scandal
The Wells Fargo fake account scandal
The subprime mortgage crisis
Research the scandal, paying close attention to how it was possible for whatever went wrong to happen.
Were there controls in place that should have prevented the scandal or fraud from happening? Explain what types of controls existed using the terminology in your reading (feedback, proactive, concurrent, strategic, operational, tactical, top-down, objective, normative, financial, non-financial).
If so, why do you think the controls were ineffective? If not, why do you think the business didn’t have sufficient controls in place?
What was management’s role in the failure of the controls?
Did the business implement new controls in response to the scandal? If so, do you think they’ll be effective?
Post your responses to two classmates’ posts.
Please remember when you do the Respond part that you are writing on my behalf so please use words such as “I agree with you I ,like your post..etc “
Classmate 1 ( Robert post )
“ The Volkswagen Diesel Emissions crisis, known commonly as “Dieselgate” was a scandal which a team of West Virginia University scholars discovered that vehicles manufactured with VW’s 2.0 TDI motor were producing 5-35 times more amounts of nitrogen oxide (NOx) than the legal limit for vehicles (Youtube, 2020). Such a scandal led to many of those on Volkswagen’s board of directors either having their contracts with the company terminated or even jailed on charges of fraud and conspiracy including Martin Winterkorn and Rupert Stadler (Youtube, 2020).
The controls which were present but not utilized were Operational, Tactical, and Top-Down controls (Carpenter, Bauer, Erdogan, & Short, J, 2013). In regards to Top-Down controls many countries including the United States, were releasing new emissions standards which car companies were required to work towards compliance, laying out what auto manufacturers were expected to achieve in order to continue manufacturing and selling cars domestically and abroad (Carpenter, Bauer, Erdogan, & Short, J, 2013). Specifically for their diesel line of vehicles, they had tactical objective to make them run more efficiently and produce less NOx, which was no easy feature as diesel was gaining popularity as a common alternative to gasoline.
The controls were not enough, as many employees at Volkswagen were unaware of the failure devices (codes to sense when the vehicle was being tested) being programmed into the engine control modules of the 2.0 TDI motors (Youtube, 2020). The only ones aware of such devices were the engineers, as well as a key number of individuals on the board of directors, including Winterkorn and Stadler (Youtube, 2020). The engineers developing this software made it possible for these vehicles to pass emissions cleanly when measured, but during regular commute would produce well beyond the legal amount of NOx, allowing the company to cheaply circumvent these laws without altering the design of their motors (Youtube, 2020).
While not all board members were guilty of conspiracy, Martin Winterkorn who rose to the board through the company’s quality control department denied any involvement until proven guilty, as the same with Stadler (Youtube, 2020). Others including Ferdinand Piëch and former Israeli ambassador to the UN Avi Primor attempted to raise concerns but were met with denial (Youtube, 2020). It is important to note that both Winterkorn and Piëch were in a struggle for power over the company during this time (Youtube, 2020).
Sample Solution
