Contents Page Page -Introduction 4 -Why Regulation Was Needed 4 -Reform & Legislation 6 -Have Reforms & Legislation Changed Anything? 7 -What Are Reputable Accounting Firms Doing 10 -Alternative Theories 11 -Conclusion 13 Essay Question “Reforms and legislation are the only means to regain the loss of public trust and re-establish credibility of the accounting profession, following the corporate collapses since 2007.” Do you agree with the above statement? What impact could future reforms and legislation have on the accounting profession? Introduction The accounting profession is seen to be a dynamic, growing and changing profession. It currently continues to play a very valuable role in society and until recently accounting had set the standards for ethical and moral behaviour in business (Guy et al.
Credit crunch and recession are great examples of external factors influencing the business. If the people are suffering from recession, they will not have money to spend money and this is how it affects the businesses. The current instability in Iraq is a good example of what may happen to businesses. In business it’s very important to understand, monitor and adapt to the political environment, because it crucially affects every business. Some of the very important factors are: Government stability effects businesses in a great range by competing with businesses to lower their costs, transparency is another important factor where anything the business does is revealed to the government and the government know exactly what they are up to.
Problem Solution: McBride Financial Services “The Sarbanes-Oxley Act (SOX), which was enacted in the summer of 2002, mandated a number of changes in corporate governance for publicly traded companies. The NYSE and NASDAQ also mandated corporate governance changes for firms listed on their respective exchanges. In this section, we discuss the likely effect of these changes on U.S. corporate governance” (Chew & Gillman, 2004, p. 79). Because business ownership in today’s market is a scary concept, to survive, business owners must be innovative and competitive to meet the demands of its stakeholders. To survive in today’s market, corporate culture is essential and must have the longevity to withstand corporate compliance because without a clear conscience, the government will shut the company down.
The Legal, Ethical, and Technological Concerns Paper Bradley J. Smithson Grand Canyon University: Business 340 Ethical and Legal Issues in Business Instructor: Professor James Goff 8/01/12 Ethical and Legal Accounting Obligations Ethics and the importance of Legal accounting methods as well as considering the process in which to arrive at ethical solutions in corporate decision making are most prominent issues today because of a history of competing for success in today’s culture of profit without cost culture and fraud. There can be many influences and pressures placed on decision makers as well as stockholders, creditors, and other parties affected by financial performance. There are offers of insider trading, overlooking or excluding important data that could affect the decision of a company officer of Board of Directors. A survey of management firms who dealt in investments discovered that nearly three-quarters of the professionals taking the survey felt that disreputable conduct, such as personal trading, insider trading, and fraudulent financial reporting are areas of alarm. Added assessments indicated that approximately half of over 700 human resource experts said they feel pressured to cooperate in reducing their administrations' standards of ethical business behavior.
Companies rely on trusting relationships with accountants to help them to meet their financial goals and maintain a competitive edge in their respective industries. The Sarbanes-Oxley Act (SOX) is a securities legislation enacted in 2002 by then President George W. Bush in direct response to the public business and financial scandals of that time, most notably Enron, Arthur Andersen and WorldCom. SOX was implemented to protect the public and stock market investors from major scandals via corporate accounting. This significant and mandatory piece of legislation introduced major changes for all organizations in financial practice regulations and corporate governance compliance. Businesses became tasked with adopting and even developing the ever-evolving role of ethical leadership and exhibitors of best practices of corporate governance as it relates to the efficiency and success of businesses, their shareholders, stakeholders and the United States economy.
Sarbanes-Oxley Act Peggy Baker Liberty University May 1, 2011 Abstract Financial statements are a means of communication between companies and investors. The information provided in financial statements has not always been true. The collapse of companies such as Enron, the scandals that followed, and the distrust from the public caused lawmakers to create the Public Company Accounting Reform and Investor Protection Act of 2002. This act is now known as the Sarbanes-Oxley Act. The Sarbanes-Oxley Act’s (SOX) main provisions include: (1) oversight board, (2) corporate executive accountability, nonaudit services, retention of work papers, auditor rotation, conflicts of interest, hiring of auditors, and internal controls.
Controversy at Flex Kendra Torbet MGT 626 Tiffin University New companies have a tremendous burden placed on their shoulders at the time of opening but if the company can introduce themselves at a time when the industry is new and immature it can enhance their overall performance. However, when the industry begins to be overrun with more and more players, it can increase the tensions to perform the competitors over. Many times with increase tensions to perform well, it can drive the company to make risky and sometimes unethical decisions. Corporate governance has an enormous impact on how companies are run, and all companies want to make the best decisions for the stakeholders of the company. However, sometimes the right decision in one person’s mind is far from the best decision to make.
Unethical Accounting Practices and the Sarbanes Oxley Act In the wake of scandals involving companies like Enron and World Com, investor’s confidence in the accuracy of a company’s financial statements was shaken. Unethical acts such as providing false information regarding expenses incurred, exaggerating business revenue, or misusing business funds are all reasons the Sarbanes Oxley Act (SOX) was implemented in 2002. Prior to SOX companies were not necessarily accountable for questionable accounting practices and company executives would take advantage of these practices for personal gain. Companies would aggressively estimate expenses occurred or exaggerate revenue to entice investors to invest money or creditors to open lines of credit. In some cases executives would misuse company funds for personal use, such as vacations on company credit cards of use of company planes for private adventures.
“Numbers don’t lie, but liars do”, says George M. Lewellen, a forensic accountant, in regard to his work. After I obtain my bachelors and graduate degree in accounting I hope to gain my CPA and make this work my life profession. As a forensic accountant, also sometimes referred to as an investigative accountant, I will use accounting concepts and techniques to investigate fraud cases that occur within a company. Forensic accounting as a field is becoming more and more vital to a company’s success. This is largely due to three trends in the business world: rapidly increasing use of technology in financial services, the push for standards for international financial reporting, and the ever-increasing amount of white-collar crimes in today’s world.
However, the traders were fired once it was revealed that Enron's reserves were gambled away which nearly destroyed the company. After these facts were brought to light, Ken Lay denies having any knowledge of wrongdoing. Needless to say, when required to testify before the U.S. Congress on the reasons for Enron’s collapse, Ken Lay, Jeff Skilling and Andrew Fastow, sought refuge under the Fifth Amendment. Andrew Fastow, Jeffrey Skilling, and Kenneth Lay are among the most notable top-level executives implicated in the collapse of Enron’s. Kenneth Lay, the former chairman of Enron was prosecuted on 11 criminal counts of making misleading statements and fraud.