ipl-logo

Sarbanes-Oxley Act Fraud Case Study

794 Words4 Pages

The Sarbanes-Oxley Act of 2002, passed due to series of failures designed to help protect the interest of the investors. The SOX Act created a total revision of regulations for public accounting and professional auditing. The SOX Act is considered to be the most useful legislation affecting public corporations and independent audits in the late 1930’s. Despite the Sarbanes-Oxley Act fraud and abuse still may exist in the corporate world. Since the SOX Act, corporations have used significant resources to access and improvement their internal and external audits, and they are a better position to deter fraud before it happens. However, there is little evidence that proves that fraud has been reduced. Anti-fraud may have decease since the …show more content…

“ An organization’s financial statements are the end product of the accounting cycle and provide a representation of a company’s financial position and periodic performance. The accounting cycle includes the procedures for analyzing, recording, classifying, summarizing, and reporting the transactions of a business or organization” (Albrecht, Holland, Malaqueno, Dolan & Tzafrir, 2015). Moreover, the client—firms relationship can harm the result to their investors when financial misconduct makes it difficult to support confidential claims when it comes to …show more content…

The Sarbanes-Oxley Act has affected all mandatory reporting organizations both foreign and domestic. “ A concern with using the SOX as an instrument is that it was enacted during a single year and it is, therefore, possible that firm policies and values were influenced by other events at the time”(Banerjee, 2015). The SOX Act also affects the individuals who play a role in ensuring the integrity such as accounting firms, attorneys, and research firms. The following are recommendations that I have made to potentially improve the Sarbanes-Oxley Act. • Restoring Confidence in the Accounting Firms • Enforcing the Securities Laws • Improving the integrity of the financial reporting process for top-management • Improving the Performance • Improving Financial Reporting and

Show More
Related
166 Words | 1 Pages

This provision of Sarbanes-Oxley is good law. It does not represent over regulation by the government because public accounting firms should not be able to perform certain non-auditing acts for clients they also audit. The acts that audit would be done

Read More
287 Words | 2 Pages

The chief accountant (CA) of an organization is charged with understanding both financial and managerial accounting, due to the opportunities for fraud within a corporation, when focusing on one or the other. Gaining a clear understanding of both will allow the CA to make precise and informative decisions because their knowledge is versed in both concepts. First, the Sarbanes-Oxley Act of 2002, holds the chief executive officer (CEO) and chief financial officer (CFO) responsible for the establishment and enforcement of a strong set of internal controls, in which are to be followed by all members of the company (Edmonds, Tsay, & Olds, 2011, p. 22 ). In doing so, these controls hold the CFO accountable for data being reported on financial statements,

Read More
358 Words | 2 Pages

On the other hand, the United States Securities and Exchange Commission is a federal agency which works towards safeguarding investors. SEC has established a division called the Financial Reporting and Audit Group (FRAud Group), which strives to “Identify and prosecute securities law violations related to financial reporting and audit failures” (SEC, 2017). Additionally, FRAud continually searches for aspects vulnerable to financial reporting, which are dishonest. Therefore, the group continually analyzes financial statement emendations through the incorporation of advanced technological

Read More
547 Words | 3 Pages

This chapter used companies, such as Colombia, in the beginning and Seirra Corporation in the four financial statements. This chapter no only explained how it should be done, but it also explained the scandals and some that had scandals. Some of the companies talked about were Enron, WorldCom, HealthSouth, and AIG. Scandals are not good for corporations and businesses because it leads a potential investor or creditor to not trust the financial statements, because they were lies. Since scandals became an idea that was thought to be good, so corporations would get investors or creditors, it led to congress passing what the Sarbanes-Oxley Act (SOX).

Read More
902 Words | 4 Pages

Boeing Case Study: Sarbanes-Oxley Act's Internal Control Mandates and Whistleblowing Name University Boeing Case Study: Sarbanes-Oxley Act's Internal Control Mandates and Whistleblowing Similar to other public companies, Boeing intends to comply with the Sarbanes-Oxley Act's (SOX) internal control mandates. To ensure that its internal audit committee sufficiently handled all requirements, Boeing contracted with PricewaterhouseCoopers (PwC) auditors for additional support. In January 2007, Matthew Neumann and Nicholas Tides, two employees assigned to Boeing's internal audit department, noticed significant problems in their company's IT financial reporting controls. This essay determines the ethical requirements of an internal

Read More
1594 Words | 7 Pages

Fraud is defined as “the intentional deception made for personal and monetary gain” (Hill, 2005). Many people think think of fraud as making an illegal ID or forging papers. Another type of fraud that often goes unnoticed to the untrained eye is unethical accounting, also known as accounting fraud or ‘Cooking the books”. Accounting scandals are complex and can be very tricky to locate even under close inspection of a company’s accounting records. Accounting relies heavily upon numbers balancing each other out.

Read More
462 Words | 2 Pages

The Management's Discussion and Analysis section is the premise of perceptions from the SEC staff. The SEC is ordered by the Sarbanes Oxley Act (SOX) to audit organization in any event once like clockwork. In this section, it expresses a rundown of the organization so financial specialists get an impression. The section concentrates on the difficulties and risks that could affect either the organization's cash flow circumstance or the consequences of operations. With respect to the outcomes, the SEC teaches the organization's management group to reveal vulnerabilities, patterns, changes to past explanations, and investigation of the reasons for these progressions.

Read More
1889 Words | 8 Pages

(The Costs and Benefits of Sarbanes-Oxley, 2014,

Read More
1136 Words | 5 Pages

In the first place, nowadays we know that the audit firm was heavily conflicted on some client accounts, receiving millions of dollars in fees in return for the compilation of better audit reports. In addition to this, the management of the audit firm was more focused on the generation of revenue rather than on the quality and independence of their audit work. Another flaw in Arthur Andersen’s governance procedures was the fact that the executives did not manage to control and address the behaviour of internal lawyers and senior audit partners, who showed signs of misconduct and failed to abide by professional and ethical matters. Another mistake that the audit firm made was that when faced with suspicious manoeuvres within some financial statements, no further actions and investigations took place, giving rise to further wrongdoings. Furthermore, some partners of the audit firm were allowed to claim superiority over specialists and auditors, leading to conflicts of interest.

Read More
976 Words | 4 Pages

In addition, penalties for activity of fraudulent financial are much more critical (M Bazerman &Messick D,1996). In place with some standard rules and regulation, mostly corporations are less possible to commit any activity of fraudulent because from lawmakers more scrutiny. Also, to survive corporations have a better opportunity as a company with their investor when they are truthful with their lenders and investors upfront, than if they were to attempt to hide any activity of

Read More
1439 Words | 6 Pages

Rules based accounting: Following the accounting scandals of Enron and WorldCom the United States introduced the Sarbanes-Oxley Act 2002. This act introduced a set of rules for accounts to be prepared in accordance with and if these rules were not adhered to then significant potential sanctions could be imposed on directors. WorldCom were one of America’s largest long distance phone companies and between 1999 and 2002 had one of the world’s largest accounting scandals. WorldCom managed to inflate profits by $3.8 billion by booking expenses as capital expenditure and inflating revenues from fictitious accounts.

Read More
1275 Words | 6 Pages

The accounting profession has been and will continue to be on the front lines of the challenge to provide investors, managers, directors, regulators, and others with up-to-date, reliable, and comparable financial reporting information, while the demands placed on the profession are. We expect financial statement preparers to apply judgment in the preparation and auditors to apply judgment in the audit of financial statements in a professional manner. This involves applying relevant training, knowledge, and experience within the context provided by relevant professional and technical standards, as applicable, in making informed decisions about courses of action that are appropriate in the circumstances. Confidence in the profession and in both rules- based and principles-based standards require demonstrating collectively that, as professionals, auditors must be capable of making sound judgments, because it is vital for the future of the

Read More
821 Words | 4 Pages

(2005) in their study provided numerous fraud protection and detection techniques. Rezaee (2005) however, finds five factors that explain the several high-profile ‘financial statement’ frauds. These factors are: cooks, recipes, incentives, monitoring and end results. Willison (2006) examined the reasons that are responsible for the breakdown of ‘Barring’ Bank. The collapse resulted due to the failures of management, financial and operational controls of Baring

Read More
798 Words | 4 Pages

(Bratton, 2002). The Enron scandal in 2001 that resulted in the collapse of its auditor, Arthur Andersen, had the public starting to question the ethics and integrity of the financial audit process, where before this scandal it was assumed that the ethical and legal liabilities or even the reputational concern would have prevented the auditors from colluding with their

Read More
843 Words | 4 Pages

Journal Of International Accounting Research, 4(1), 39-71. http://dx.doi.org/10.2308/jiar.2005.4.1.39 IESBA. (2006). Code of Ethics for Professional Accountants December 2006 – London, UK. Jones, A. (2002).

Read More

More about Sarbanes-Oxley Act Fraud Case Study

Open Document