Ethics of Penn Square Bank and the Dow Corning Bankruptcy ACC/557 Accounting Ethics
Ethics of Penn Square Bank and the Dow Corning Bankruptcy Penn Square Bank: What were the ethical pressures on the firm concerning documentation, credit extension, and revenue recognition that lead to the final collapse? What should have been done to reduce or offset these pressures? Situated in Oklahoma City, OK, Penn Square Bank was a small commercial bank which made high-risk financial loans during the late 1970s in the oil boom. The bank ultimately collapsed during the early 1980s due to their financing practices. The bank was overestimating and valuing its customerâ€™s gas and oil reserves that let at that time to fund a bigger credit line. In addition to that, the bank didn't need that to client complete proper loan paperwork or proper security to back the financial loans. Penn Square bank utilized their links with bigger banks all over the United States of America to offer the loans to them. Penn Square became a middle-man of types and was earning money from the loan application charges and loan administration charges charged to the big out of state banks.
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