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Ethics Set By Congress, PCAOB, And FASB

1144 Words5 Pages

Introduction Ethics in accounting can be defined as a set of moral principles that a company needs to follow and enforce in their employees. The reason why acts like SOX of 2002, and GAAP exist is that they give a company set specific rules that they need to follow. Having these set principles has many benefits such as improved reputation, not as many liability issues, build trust within the company, and protects the company from fraudulent acts. In this paper, you will see different cases where the ethics of a company were ignored and the effects of it. Also, the different acts and principles that were set by Congress, PCAOB, and FASB to ensure that companies are following the rules and are doing things correctly. Although there are many …show more content…

These are aspects of accounting that require individuals that are trustworthy because they are dealing with federals things. For example, in auditing, there are individuals that go out to companies and examines the companies financial records. After they test the different controls, they need to write a report stating whether the company had material misstatements and if the information provided was in accordance with GAAP. The PCAOB set a variety of audit standards that auditors need to follow. If these standards are not followed correctly there can be consequences for the company and also to the auditor. These set standards act as an auditors ethical rules that they need to follow. Another example would be the standards that tax accountants need to follow. The items that they report go directly to the IRS and can affect the accountant and also the client. Accountants need to do to report items that are valid, have proof, and do things in an ethical …show more content…

In 2001, they reported a loss of $618 millions dollars, and after this, the SEC began an investigation (CNN). After a failed attempt at merging with Dynergy, the company filed for bankruptcy. The US Department of Justice began to investigate why they suddenly declared a bankruptcy. In 20002, it was discovered that they had made accounting loopholes that hid the fact that the company was in billions of dollars in debt. This company was audited by Arthur Anderson, but he was not an ethical individual. When the issue abrupted, he was destroying documents that had to do with the Securities and Exchange Commission (SEC). This caused Anderson to receive jail time because he did something completely illegal. He was in charge of auditing and reporting those fraudulent acts. The CEO of the company also did not do anything about the fraudulent acts occurring in their accounting

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