Health South

Table of Contents

Introduction3

Discussion3

Impact on Stakeholders:3

Ethics and Health South:4

The Role of Auditors at HealthSouth:6

Key Implications:6

Organizational Practices that led to Debacle of Health South:7

Stake Holders and Competing Conflictive Culture:7

Stake Holders and Dishonest Corrupt Culture:8

Stake Holders and Rigid Traditional Culture:9

Outcome and Fairness of Punishment:10

Conclusion12

References13

Health South

Introduction

The study relates to Health South, which are in need of adopting ethical principles and creating a professional image, while addressing the problems that include the unhappy managers and coworkers. Inappropriate practices of business that include creating the false statements and people doing the physical therapy, which are not unlicensed also the unethical attitudes involving the CEO also the corporate leaders. There are indications of lack of leadership and purpose in this company and procedures which are unethical that should be addressed in time.

The study provides within this case a framework to turn this downward cycle around and make Health South ethical and profitable organizations. First, we will separate accounting duties, which will help people remain honest. Furthermore, all the employee's personal references, education, work history and licenses will get checked and verified separately by the human resources. In addition to this, the board members will consist of members with an assortment of background and will get elected. The board of directors will also approve all salaries and bonuses of employee. Putting these principles in place will help turn-around the culture at Health South.

Discussion

Impact on Stakeholders:

Health South is a publicly traded healthcare company founded by Richard Scrushy in 1984. Scrushy renowned for his astounding management style and the incessant success that generated from it. However, what appeared to be a resounding success was nothing more than a series of well organized unscrupulous acts. Five of Health South's accountants along with CEO Scrushy got convicted of fraud in 2003, but two years later, Scrushy got acquitted on all charges because he was unaware of the fraudulent activities. The issue is whether CEOs are liable for illegal activities within their businesses without their knowing or not. CEOs that are unaware of such activities is also responsible because they have failed in their duties on multiple accounts (Miller, 2010).

With some clarity on some information and supplementary facts, it will help determine the level of Scrushy's involvement and responsibility in the frauds. The case stated that the practices rarely met the threshold for an audit review, but in the instances that it did, was there any suspicion and how did they go unnoticed for 15 years. This is important because if some activity called for a review, Scrushy should have paid careful attention to the matter and performed a thorough investigation especially if it has occurred more than once. An additional fact that would help is how the five convicted accountants reacted to Scrushy's denial of his involvement in the fraud without any incentives to lie. With their testimonies, recording, and at the time, the newly implemented Sarbanes Oxley Act of 2002, he should have been liable to some degree (Halverson, 1953).

Scrushy, like every other CEO, is subject to his ...