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.
To the President of LJB: It is critical to note that going public is a phenomenal and transformational event for any company. However, before any private company makes the final decision to go public, there are important decisions that needs to be made; one of them being the enforcement of proper internal control procedures. LJB will need to “meet additional requirements and continuing obligations as a public company that may require new skills sets, additional resources and changes to the business” (PricewaterhouseCoopers, 2010). This simply means that the company needs to implement internal control measures that will satisfy the requirements of the Sarbanes-Oxley Act of 2002 (SOX) section 404 and meet the entire five interrelated internal control components. Mr. President, everyone at LJB needs to understand the definition of internal control and what is required of them under the SOX law since this law requires a combined effort from top management and employees alike.
The purpose of the AICPA Code of Professional Conduct includes responsibilities, the public interest, integrity, objectivity, independence, due care and scope and nature of services. Although all of these are important principles to adhere, I think that the three most important principles are integrity, the public interest and due care. As a CPA principle conduct, integrity distinguishes that public trust is served by being honest. Honesty is an ethical value which means we should express the truth as we know it without deception. Full disclosure supports transparency and the accounting professional should disclose all information that investors, owners, creditors, and the government need to know to make informed decisions.
Internal control requirements When the company decides to go public the requirements listed below will prove to be very helpful. It is the responsibility of top management to make it clear that the organization values integrity and that unethical activity will not be tolerated. This component is often referred to as the “tone at the top.” Control is most effective when only one person is responsible for a given task. There are many accounting regulations required by a public company. All accounting reports must follow the
What having a duty of care means for a Care Giving Organisation. Aiii: Trained to their Organisations Standards. Ensuring employee’s understand CQC and the definition Duty of Care. Legally, employers must abide by relevant health and safety and employment law, as well as the common law duty of care. They also have a moral and ethical duty not to cause, or fail to prevent, physical or psychological injury, and must fulfil their responsibilities with regard to personal injury and negligence claims.
Consider the following: • What kinds of accounting, audit, and tax services does the firm provide? • Who is their target market(s) by industry and company? • Why would prospective clients give serious consideration to have KSM handle their accounting, audit and tax services? 3. Working in an ever changing accounting, audit and tax environment that is driven by change and strict regulatory adherence, how does the managing partner (David Resnick): • Ensure strict employee compliance to federal and state regulation and the company’s high ethical standards?
Code of ethics to be effective for a company must be in writing and is agreed on by all employees, executives, managers, and directors and must be signed each year to comply with changing laws and policies and to be certain they are still in agreement with the laws (Business Code of Ethics, 2009). A standard set of rules, values and guidelines, code of ethics rule behaviors in ethical business in companies, professions and employee organization and interactions with the public and employees (Code of Ethics, 2009). According to section 406 of the code, written standards are made to discourage wrongdoing and works to promote: • Truthful and ethical
This also includes establishing a private-sector regulator to oversee the auditing profession to combat accounting fraud, and enhancing financial disclosures. Companies are under more pressure to comply with SEC and Sarbanes-Oxley Act after recent and growing concerns about their ethical behaviors. Role of Ethics and Compliance in the Financial Environment Starbuck’s role of Ethics and Compliance in the financial environment applies to the Chief Executive Officer (CEO), Chief Financial Officer (CFO), comptroller, and other financial leaders. The company’s code of ethics encompasses
Your duty of care means that you must aim to provide high quality care to the best of your ability and say if there are any reasons why you may be unable to do so. When professionals act within a duty of care they must do what a reasonable person, with their training and background, can be expected to do. So, for example, an accountant must get their sums right and apply for the right tax exemptions for their clients. In the same way, a care provider is expected to be trustworthy, in accordance with their code of practice, and apply suitable skills when carrying out care services. Providers and care workers must always take reasonable care.
Financial Ratio Analysis Financial ratios are extremely useful indicators of a firm’s performance and financial situation. (Financial Ratios, 2007) They are often used to help analyze trends within and industry and to help compare a firm amongst others. Ratios are highly important profit tools that help to implement plans that improve profitability, liquidity, financial structure, reordering, leverage, and interest coverage. (Bernstein & Wild, 2000) Ratios are often able to help predict performance as well as provide indications of many potential problems. There are several issues to consider when comparing the financial ratios of a public company to the industry averages.