ipl-logo

The Sarbanes-Oxley Act Of 2002 (SOX)

674 Words3 Pages

The professional ethics become a priority in today’s business world. The improvements and regulations towards accounting ethics have been made for the last fifteen years. Since early 2000s, regulators have issued the Sarbanes-Oxley Act of 2002 (SOX), Sections 302 and 404 to oversee the financial reporting, review audit requirements, and impose sanctions for inaccurate disclosure and violation of ethical standards. Following SOX, AICPA, PCAOB, and COSO together with the Institute of Management Accountants, the American Institute of Certified Public Accountants, Financial Executives International, the Institute of Internal Auditors, and the American Accounting Association developed models and themes that guide companies on accounting ethics and …show more content…

Shafer (2002) indicates the reason of accounting wrongdoings is materiality. Moreover, the management rationally and intentionally misrepresents financial statements, misleads investors, and commits the fraud for the personal gain (pp. 243-244). The regulatory changes promoted an aggressive financial reporting. The pressure of mandatory reforms and financial markets affects CFO’s personal financial interests and interests of corporation that management can manipulate with. Beaudoin, Cianci, and Tsakumis (2015) investigate the influence of incentive conflict and earnings management ethics on financial reporting. The authors view ethics and financial incentives as keys of earnings management. The low ethical standards and personal financial targets increase the issues of CFO’s earnings management behavior (pp. 505-507). The motivations of executives and accounting managers set the ground for …show more content…

Ionescu (2009) names morality, trust, and fair expectations as the most essential values for ethical relationships with a client (p. 121). The researcher states auditors, companies, and suppliers should be committed to moral engagement with clients, stakeholders, and customers (pp. 121-123). The ethical audit should consider meeting the company-clients’ ethical objectives and account for the transparency with stakeholders. The external auditors should possess the professional judgment, integrity, and objectivity. David, Kantor, and Greenberg (1994) discuss the growing number of legal proceedings due to ethical issues. The researchers believe the implementation of ethics code will help accounting professionals maintaining the independence and great performance (p.

Show More
Related

Val Riviello V. Sarbanes-Oxley Act

59 Words | 1 Pages

According to the 2002 Sarbanes-Oxley Act court ruling of 6-3 which states, whistleblowers will have security against subcontractors, public companies, and private contractors. Any employees who reports that their company has got revenge against them for reporting alleged wrongdoing can conceivably bring legal statements against their employer. In this case Val Riviello would be protected under the Sarabanes-Oxley Act.

Read More

Compare And Contrast Gramm-Bliley And Sarbanes-Oxley

333 Words | 2 Pages

The Sarbanes-Oxley (SOX), Health Insurance Portability and Accountability Act (HIPAA) and Gramm-Leach-Bliley (GLBA) acts all revolve around safeguarding or guaranteeing that information is truthful. While each act is protecting data in separate fields there are some very clear similarities. SOX requires companies to provide accurate accounting and requires a framework that can generate financial reports that are readily verifiable with traceable source data. There are three key provisions. Section 302 makes officers responsible for the accuracy of financial statements and the strength of their procedures for financial accounting.

Read More

Ethical Issues In Australia Essay

456 Words | 2 Pages

The present file is based on the ethical and corporate governance issues which CPA Australia is facing in current time. The problem regarding self-promotion by its CEO, excessive remuneration packages to the CEO and board of directors, large compensation packages to the other professional financial accounting bodies and use of unethical language in the working environment have been described into the file. Along with this, appropriate solutions have been also recommended to the respected company with respect to the discussed problems. Table of Contents EXECUTIVE SUMMARY 2 INTRODUCTION 5 ANALYSIS OF THE PROBLEM: 6 CONCLUSION 8 REFERENCES 9 INTRODUCTION Ethics refers to the part of philosophy which includes systematizing, defending and recommending the concepts regarding what is wrong and what is right. This term seeks to answer the questions regarding human morality by explaining various concepts such as good and evil, right and wrong, virtue and vice, justice and crime and much more.

Read More

Income Smoothing Case Study

1491 Words | 6 Pages

Another pressure presented in this case for Cendant Corporation was that for the top management once again. The top management needed to have their financial information seem profitable, therefore pressured the accountant of the company to falsify and “cook the books” to make the financial statements seem actually “profitable” when it wasn’t what It really was. As said in the previous question, income smoothing was used in this case by Cendant Corporation as an unethical practice to make the investors believe that their shares were all bright

Read More

Wells Fargo's Ethical Ethics Of Wells Fargo Financial Corporation

1347 Words | 6 Pages

The implementation and education of the ethical decision-making model promote moral awareness and company values that can mitigate ethical dilemmas to an extent. The aftermath was devastating for Wells Fargo not just economically but for its image. The corporation can introduce this model in training courses for new hires and current employees. Also ensuring management comprehends the prominence of ethical decisions and are aware that they are the wheels of the car, therefore, lead by example. If the corporation initially had prioritized ethical values and decision-making evaluations at every level of the business, this scandal could have been prevented at least its magnitude.

Read More

Importance Of Accountability In Healthcare

1090 Words | 5 Pages

Having an understanding to ethical consideration and accountability will improve customer satisfaction, employee performance, and the continuum for accountability ("Ethical Leadership: Fostering An Ethical Environment And Culture",

Read More

The Pros And Cons Of The Enron Scandal

976 Words | 4 Pages

In the past, Lenders and Investors learned from these scandals, and in recent times, they know for a fact, the company is unethical or corrupted and they have become hesitant to invest in any company that they think. Lawmakers and regulators of the Unites States were very worried that the economy of the country would suffer once lost confidence by investors in corporate accounting because of unethical financial reporting. In response, the Sarbanes-Oxley Act passed by the Congress (M Bazerman &Messick D,1996). The main aim of the Sarbanes-Oxley Act is in place to decrease unethical conduct in accounting scandals and corporations. As a result of Sarbanes-Oxley Act, upper management should now certify the truth of financial information.

Read More

Volkswagen's Corporate Social Responsibility

1858 Words | 8 Pages

The selected corporation is Volkswagen (VW), a German car manufacturer headquartered in Wolfsburg, Lower Saxony, Germany. Established in 1937, Volkswagen is the top-selling and namesake marque of the Volkswagen Group, the holding company created in 1975 for the growing company, and is now the second-largest automaker in the world (Wikipedia, 2016). Volkswagen’s corporate website is http://www.vw.com/. According to the International Ethical Business Registry, there has been a dramatic increase in the ethical expectations of businesses and professions over the past ten years. Increasingly, customers, clients and employees are deliberately seeking out those who define the basic ground rules of their operations on a daily basis.

Read More

Ethics And Moral Issues In The Enron Scandal

931 Words | 4 Pages

(Johnson , 2014 ) In this case , it shows that under normal circumstances the management level of a company or corporation will choose to hide the truth over honesty and integrity .In other way , profitability has override the important of ethics in the corporation .

Read More

Ethical Issues In Waste Management

1009 Words | 5 Pages

The false accounting records were unethical because it means management was enriching themselves. They were getting earnings based on the false availability of funds. They also did this to keep their jobs. When a company is not performing financially well the top positions are the ones usually at risk of being retrenched, as a result of implying the company was financially stable they were protecting their jobs. False accounting also results in duping investors that trust the financial records of the company.

Read More

Examples Of Unethical Behavior In Business

1191 Words | 5 Pages

A) Introduction Unethical behaviors in business affect everyone since you either work in the field or are a consumer of its services. Unfortunately, almost every company usually has individuals who act unethically whether it is for their personal benefit or for the sake of the company they work for. Unethical behaviors in business might be as simple as using company property or funds for personal gain to inside trading and financial fraud. According to The Chartered Institute of Management Accountants, nearly one third of business professionals feel pressured to compromise their ethical standards and are increasingly pushed towards unethical behavior. Moreover, “misconduct is common and accepted by business services professionals, the integrity of entire economic systems is at risk”, states Jordan A. Thomas, partner and chair of the Whistleblower Representation Practice at Labaton Sucharow law firm.

Read More

Interdisciplinary Approach To Business

2056 Words | 9 Pages

The Lehman executives and the company’s auditors Ernst and Young were the main players in this deliberate misrepresentation of the accounting information9The 10 Worst Accounting Scandals of all Times, no date). This is an indication of abuse or misuse of power among executives. The agency problem calls for more caution among corporate executives about boosting their accounts and as such it is very vital to introduce and implement business ethics among business people. According to (Grane and Matten 2004), they explain business

Read More

Examples Of Ethical Responsibility

902 Words | 4 Pages

• Ethical Responsibilities Even though economical and legal responsibilities exemplify about fairness and justice, ethical responsibilities cover those activities and practices that are expected or prohibited by members of society even though they are not codified in law. Ethical responsibilities represent those norms, standards or expectations that reflect a jest of what employees, consumers and shareholders regard as just, fair or in keeping the protection or respect of stakeholders’ moral rights. They are important to perform in a manner consistent with expectations of societal and ethical norms. The firms should recognize and respect the ethical moral norms adopted by society from time to time.

Read More

The Importance Of Ethical Leadership In The 21st Century

1427 Words | 6 Pages

Managers need to transform into moral leaders: Ethics in business In the 21st century the business organizations have faced many ethical scandals. The different type of ethical scandals are accounting manipulation, bribery, infringement of civil rights, child labour and sexual malpractices at workplace (Frenkel, 2013). Some of the top ethical scandals are Enron, Satyam, Lehman Brothers and Bhopal gas tragedy (Rodriguez, 2013). The business organizations can’t achieve global success without ethical business practices.

Read More

Ethical Issues In Accounting

1710 Words | 7 Pages

Ethical issues in accounting and finance. Summary This task analysis the issue of ethics in accounting and finance as discussed in the International Journal of accounting and finance. Currently, ethics of any firm is an important topic due to the numerous scandals that have taken place in different countries which have resulted in damage to the economy and society.

Read More

More about The Sarbanes-Oxley Act Of 2002 (SOX)

Related Topics

Open Document