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Fraudulent Accounting In Response To The Stock Market Crash Of 1929

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Programs in accounting also led to a standardizing in accounting journal entries and statements. Before, every company and institution had their own method of accounting – when it came time to publish or exchange financial statements, it was often hard to comprehend one companies method of accounting (Harley, 2014b). Another benefit is that the accessibility of accounting programs are so widespread, small businesses are now able to minimize their expenses by taking care of their own accounting needs.
Ethical and Legal Issues Throughout centuries of accounting, the most prevalent ethical issue regarding accounting is money fraud. Among bookkeepers and accountants, there will always be someone to manipulate the books in their favor. Back in …show more content…

For example, one of the problems leading up to the stock market crash of 1929 was caused by fraud; it was found that multiple companies committed fraudulent accounting on the New York Stock Exchange (Beattie, n.d., para.2a). In response to the stock crash, the Securities and Exchange Commission came into existence to legally crack down on accounting fraud and embezzlement (Beattie, n.d., para.3a). With the rise of computer accounting, fraud has decreased dramatically. In response to abundant cases of fraud seen in accounting, technology has allowed companies to set up legal internal controls to minimize fraud. In the past, there used to be only a small group of people that dealt with both assets and accounting, because the jobs were handled simultaneously. Programs now allow for separation of duties …show more content…

It has become a managers’ duty to maintain security over internal controls, minimizing the risk of information theft, fake vendors, data deletion, backups, and hackers (Shanker, n.d.). There are standards and revisions made according to these risk factors, but concerns are being raised that if only top management should be the ones majorly responsible for a theft or hack that often occur at random. Information systems professionals have started to become incorporated into top management belonging to companies in need of high security, but not enough duties are within their regulation, escalating security issues (Harley, 2014b). Just yesterday, a massive cyber attack was aimed at JPMorgan Chase resulting in more than 83 million households and businesses losing their accounts and personal information to alleged Russian cyber hackers (Goldstein et. al., 2014). This shows incompetence and raises security concerns underlying financial institutions and companies as a whole. As more and more accounting information is stored on clouds or central servers, concerns are being raised about security against external forces as compared to internal controls (Borgia, n.d.,

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The Securities and Exchange Commission, also known as SEC, was established in 1934 for the purpose of solving issues directly associated with the stock market collapse of 1929. Investors and the public had begun to lose confidence in the stock market as a result of the investigation done by the Committees on Banking and Currency of the New York Stock Exchange. The investigation brought to light misleading sales operations and stock manipulations and eventually led to the devastation the United States economy faced. Primarily drafted by Huston Thompson, Walter Miller, and Ollie Butler, the Securities Act of 1933 was passed to increase public trust in the capital markets by requiring uniform disclosure of information about public securities

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