Running head: SARBANES-OXLEY LAW Sarbanes-Oxley Law Alexandria B. Lover Liberty University ACCT 302-B03 Abstract Since 2002, the Sarbanes-Oxley Act has been in place to not only raise awareness for employees and investors but also improve the management of internal controls in public corporations. Under the law, CEOs and CFOs are solely responsible for the accuracy of the financial reporting by their companies as well as the internal control structure to include fines and criminal prosecution if consciously falsified. The Sarbanes-Oxley Act was passed as a response to the Enron fiasco in an attempt to protect investors from corporate accounting fraud. The Act, which is officially known as Public Company
The company, the employees, the investors, and the general public can all be involved when unethical behavior occurs. The credibility and reputation of a business can be greatly affected. The main party involved in this unethical research case was the Apollo Group, which is the parent company of the for-profit education corporation University of Phoenix, its chief executive officer and its chief financial officer. Other parties included shareholders of the company and The Policeman’s Annuity and Benefit Fund of Chicago. The case was allowed to be taken to court based on the Private Securities Litigation Reform Act of 1995 (PSLRA), which was intended to reassure institutional investors to lead securities fraud
The offenses are harmful to not only businesses in the United States of America but to the world of business as a whole and are unacceptable. If the law had been in place, many shareholders would have been safeguarded but numerous investors lost their lifetime savings by company insiders. The corporate world is a much more secure place with regards to investing with all of the changes and modifications which are now enforced. I still think there are other actions which can be taken to protect shareholders even though the modifications have significantly improved the procedure. Businesses must develop an ethical balance so as not to take advantage of unknowing shareholders who have invested their lifetime
Retrieved February 1, 2009, from University of Phoenix, rEsource, Virtual Organization Portal: Kudler Fine Foods, MBA/502 Managing the Business Enterprise. University of Phoenix, (n.d.). Sales and Marketing: Marketing Overview. Retrieved February 1, 2009, from University of Phoenix, rEsource, Virtual Organization Portal: Kudler Fine Foods, MBA/502 Managing the Business
Ethics paper Amanda Tatom MGT/498 November 24, 2014 Richard Arriaga Ethics According to Wheelen and Hunger (2010), “Ethics is defined as the consensually accepted standards of behavior for an occupation, a trade, or a profession” (Chapter 3). The discussion of business ethics is always filled with the reminders of the past of large companies that altered numbers for the benefit of the profit margin in order to allow for stocks to go up and bring in more investors. A code of ethics is important to have as a guide of what the company’s direction is. Ethics and social responsibility If the focus of social responsibility is taken from Milton Friedman or Archie Carroll the consensus is that a business does have
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.
AICPA American Institute of Certified Public Accountants (AICPA) is a voluntary organization of CPAs. The AICPA Code of Professional Conduct focuses on a set of professional and ethical standards followed by CPAs. The primary standard set by the AICPA Code of Professional Conduct is to honor the best interest of the public, even if doing so sacrifices personal gain. The code also focuses on constantly exercising professional and ethical conduct (Mintz & Morris, 2011). The executives at WorldCom knowingly misstated capital spending moving funds from one account to another to hide the reasons for the expenditures, and manipulated financial reporting.
Ethicality of Accounting Activities Learning Team E - Ashley Horne, Brochelle Shirley, Erika Schmidt, and Mareta Guerrero ETH/376 September 30, 2013 Tammie Holland Ethicality of Accounting Activities To evaluate the ethicality of accounting activities, Learning Team E will review the Cynthia Cooper and WorldCom case using the following criteria. This review will identify the key accounting activity involved in this case and evaluate the accounting activity in terms of the AICPA Code of Professional Conduct. Additionally, determine how the accounting activity was or was not equitable to internal and external stakeholders and which aspects were ethical or unethical. Finally, through the identification of key team members in this case, this review will explain his or her ethical or unethical actions and how those actions influenced the events that occurred. Key Accounting Activity Involved The key accounting activity involved in the case of Cynthia Cooper and WorldCom was capital expenditures, which is defined as “…the funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment” (Capital Expenditure - Capex, 2013, para.
● ● Requires codes of ethics for senior financial officers. In addition, Section 404 of the Sarbanes-Oxley Act requires public companies to attest to the effectiveness of their internal controls over financial reporting. 29. Some major challenges facing the accounting profession relate to the following items: Nonfinancial measurement—how to report significant key performance measurements such as customer satisfaction indexes, backlog information and reject rates on goods purchased. Forward-looking information—how to report more future oriented information.
If this was not the case, Congress would not have enforced the Sarbanes-Oxley Act. In 2002, the financial scandals that occurred by multiple corporations proved that the accounting profession was in dire need of some regulation by the government. I predict that corporate fraud will remain the same based on the research produced during the writing process for this assignment. There is no fool proof way to completely diminish financial fraud or to protect investors. As people as a whole have proven time and time again, there are rules and laws and there are people whom break those rules and laws for personal gain.