The following is the topic for this week's team assignment: The Sarbanes-Oxley Act (SOX) signed into law in July 2002 was intended to improve the accuracy of the financial statements prepared by publicly held companies. Carefully read the summary of this Act. A. Discuss how this law is likely to affects issues of : Audit committees of public company boards of directors Increased the workload and the integrity of these officials has fired some officials and made it a more rigorous job to pursue because of the seriousness of the day to day operations The act created the Public Company Accounting Oversight Board to police the accounting profession and set auditing standards. It shored up the role of the audit committee, making it
Full disclosure requires that publicly traded businesses use accrual based accounting and revenues are recognized as sales are earned. Full disclosure also requires that footnotes describe accounting procedures and provide details for unusual transactions. With companies such as Enron and WorldCom, the accounting field has an increased need for businesses to tell the truth in its financial statements. Full disclosure acts as the obligation for businesses to be truthful in its statements in order to protect the parties
SOX also sought to strengthen consumer and investor confidence and confidence in financial information by changing the auditing procedure and making management more accountable for fraud prevention, catching, and existence within the pot. Lastly, it shielded whistleblowers from corporate retribution and endowed them with protecting freedoms. Based on aforementioned information, I would like to consider the implementation of SOX would have been an immediate check to financial statement fraud in its initial launch in 2002; unfortunately, there will invariably be somebody who believes she is above reproach and disregards societal measures of intellect, decency and control to pursue her own
True (f) The objective of financial reporting is the foundation from which the other aspects of the framework logically result. True E2-4 Instructions Identify the appropriate qualitative characteristic(s) to be used given the information provided below. (a) Qualitative characteristic being employed when companies in the same industry are using the same accounting principles. Comparability (b) Quality of information that confirms users’ earlier expectations. Confirmatory value (c) Imperative for providing comparisons of a company from period to period.
On the allocation of goodwill, Financial Accounting Standards Board does this based on the reporting unit level while Independent Accounting standard body uses cash generating unit (Williams, 2003). Independent Accounting Standards Body addresses recovery of impairment losses but according to Financial Accounting Standards Board, impairment loss of goodwill in a previous period cannot be reversed. The two bodies test for goodwill impairment annually. Convergence of the two bodies will lead to creation of new improved standards for the two bodies. Based on the determination of the goodwill, there should be a test for impairment.
Harmonization is the process of increasing the level of agreement in accounting standards and practices between different countries. Many parties are interested in international harmonization those are who use, regulate and prepare financial statements. Such as investors and financial analysts, multinational companies, some government, stock exchange market and its regulators and accounting standard setters etc. Investors and financial analysts * They need to be able to understand the financial statements of foreign companies whose share they might wish to buy. For example, Nokia provides different language versions (English, Germany, French and Germany etc.)
Running head: REFORMING CORPORATE AMERICA Reforming Corporate America Audri Rowell University of Phoenix Law 421 Jerome Tatar August 6, 2012 Reforming Corporate America The recent scandal acts within major corporations will no longer be an easy target. Holding management accountable for reporting financial data is the basis of the Sarbanes-Oxley Act of 2002. Congress has worked to restore the confidence of the nation through this reform. Prior to 2002 a study shows market turmoil with the Crash of 1929 along with the Great Depression to corporate fraud in the 1930s. The Sarbanes-Oxley Act is the first act with provisions to ensure little to no fraud within corporations.
A PR agency will not only fact check every statement and directive, their job description includes knowing how to present news in the most advantageous way to the public, intimate knowledge of the media landscape and how to influence the firm’s public perception. Another agency which can offer invaluable support during a crisis is an external auditor. During a financial upheaval, it may become imperative to have a third party reporting on the fiscal health of the firm. This creates a transparent mechanism which is credible and can act without fear of repercussions, as internal auditors may be too close to the firm. This in turn leads to restored trust and stability in the firm, from both employees and
The conceptual framework is a dominate form of normative accounting theory and Godfrey, et. al (2006, p. 412) dictate a conceptual framework in the context of financial accounting as “a definitive statement of the nature and purpose of financial accounting and reporting and which provides guidance for all accounting practice”. The Financial Accounting Standards Boards believes a conceptual framework to be integral as it adds a level of rigor and discipline that will result in more consistency in final statements and general modes of practice (The Financial Accounting Standards Board (2001). The primary function of this framework is to provide agreed standards, to remove the ambiguity and personalisation of the decision making process. Hence a conceptual framework is a firm example of normative accounting theory as it is prescriptive, detailing how practices should
I. Introduction Campaign Finance Reform is the political effort in the United States declared to change money involvement in political campaigns in order to provide fairness of elections. The Bipartisan Campaign Reform Act (BCRA) of 2002 (also known as “McCain-Feingold” or “Shays-Meehan”, after its sponsors), the recent federal law on campaign finance, revised some of the limitations set in 1974, and prohibited unregulated contributions and spending by independent organizations in favor of candidates (“soft money”) and put limitations on political advertising. While declared goal of the Campaign Finance Reform appears to be upright, its norms in fact conceal threat to constitutional freedoms, gives benefits to certain groups and has number of unintended harmful consequences. II.