...Alia Rahman Sarbanes-Oxley Act of 2002 (SOX) is an act was created as a safe guard mechanism for the investor. The massive accounting fraud created by Enron and WorldCom in 2000, caused many individuals’ savings and retirement. The company falsified their earnings; disclose false report in their accounting statement, they used the investors’ money to generate personal wealth. This unlawful, unethical and negligent behavior of the company management shocks the financial world. The investor lost confidence and other company was losing their investors. The congress got involved. It was crucial to reduce this abuse and corruption with accounting practice, save the investors fund and other company. As a result the Congress created an Act called...
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...theorld of financial accounting Sarbanes and Oxley or SOX is one of the most important pieces of legislation passed in this decade or even in the history of financial accounting. Sarbanes and Oxley brought about major changes in financial accounting which allows for more regulation of the accounting profession. It took Accounting form being looked at as a numbers game and placed more importance on the communication aspect of the profession. This essay will focus on Sarbanes and Oxley and its impact on the accounting profession as a whole. How can one piece of legislation weigh so heavily on a profession? To answer that question one has to look at the impact Sarbanes and Oxley has had on the practice of public accounting. Prior to Sarbanes and Oxley the regulation of public accounting was done internally, through organizations such as the SEC. However with the passage of Sarbanes and Oxley the profession was given an overhaul making companies more accountable. Sarbanes-Oxley was established to improve the quality and transparency of the financial statements issued by public companies. With that purpose in mind Sarbanes-Oxley developed a new board to oversee how financial statements are audited according to independent standards, the Public Company Accounting Oversight Board. This changed the game. It decreased the chance of companies falsifying financial statements, mainly because of the threat of penalties and imprisonment. In addition Sarbanes and Oxley have had a cascade effect on...
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...WITH THE PCAOB AT THE TIME OF THIS ARTICLE. The author of this paper is Douglas R. Carmichael. On April of 2003, Mr. Carmichael was appointed the first Chief Auditor and Director of Professional Standards for the Public Company Accounting Oversight Board. As such he was the primary advisor to the PCAOB on policy and technical issues relating to the auditing of public companies, including but not limited to auditing standards, registration, inspection, and thus enforcement of any mandates that are part of the Sarbanes-Oxley Act. QUESTION 2) WHAT DOES CARMICHAEL SEE AS THE UNDERLYING MISSION OF THE PCAOB? Carmichael views the underlying mission of the PCAOB to be the restoration of the public’s confidence in the auditor’s reports and findings. Accounting scandals, involving companies like Enron and WorldCom, prompted Congress to adopt the Sarbanes-Oxley Act as a means to establish control over accounting and auditing functions. A main focus of Sarbanes-Oxley was the establishment of the PCAOB. The PCAOB is a nongovernmental body, fully funded by fees collected by public and investment companies that benefit from independent audits. They are charged with overseeing the audit of public companies that are subject to SEC laws and related matters of the kind. Carmichael states that the confidence is not only to be earned by the accountants and auditors producing and reviewing the information, but also “by those who aspire to set the standards for auditors.” QUESTION...
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...Sarika Bond Auditing-Ambler Short Essay #2 November 3, 2009 Sarbanes-Oxley Act Provisions Publicly held companies are mandated to specific regulations of Sarbanes-Oxley Act; while privately held and non-profit companies are not specifically required to adopt the provisions of Sarbanes-Oxley Act (SOX). I don’t agree with private companies adopting the entire provision of Sarbanes-Oxley Act. I do support adopting certain parts of the Sarbanes-Oxley Act provision. It is cost prohibitive for private and nonprofit companies, especially for small private companies. Private companies and non-profit companies do not have to adopt the provision of Sarbanes-Oxley act, but they may pick and choose part of the governing principals that apply to them. There are advantages and disadvantages to adopting The Sarbanes-Oxley Act for private and non-profit companies. The advantages are that private companies that intend to go public in the future have already established an auditing committee, a whistleblower protection policy, and improved internal controls. The disadvantages are it is costly to adopt Sarbanes-Oxley Acts and requires hiring an outside independent auditor. It also creates more paperwork, such as checklist full of questions. My main argument with not adopting the entire Sarbanes-Oxley Act is that it is very costly for small private companies. “A survey of more than 300 public companies by Financial Executives International determined an average, first-year compliance...
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...corporations to overstate the value of assets or understate liabilities causing the true value of a corporation to be undiscovered. Some unethical behavior on an individual level, would be insider trading, kickbacks fraud and, as seen far too many times, the manipulation of the financial markets. The Enron Corporation was the perfect example of this unethical behavior and its discovery led to the implementation of Sarbanes-Oxley Act of 2002. The company used systematic and planned accounting fraud to misrepresent the corporation’s financial standing and, as a result, led to its shocking downfall. The company’s stock fell so sharply and quickly that many stockholders were caught off guard and lost millions of dollars. The Sarbanes-Oxley Act was enacted to mandate a sound ethical structure for corporations to operate; creating a level playing field where everyone plays by the same rules. A specific section of the Act seems to get the most response from individuals within the corporate world. Section 404 consists of three main issues that reflect the strongest impact the Act will have on...
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...Internal Controls Name XACC/280 September 4, 2011 Instructor Internal Controls Internal controls are used to help companies reach their goals and different objectives. On a basis of transactions, internal controls are actions which are taken to complete certain objectives set out. In my paper I will be discussing two primary goals of internal controls, the effects on internal controls caused by the Sarbanes-Oxley Act of 2002, stock price drop due to internal control deficiencies, and internal control limitations. In internal controls there a few goals, but the primary two are to guard assets from theft and unauthorized use. The two goals help to increase accounting records with reliability and accuracy. Internal controls are brought into place within companies and organizations achieving a goal and avoiding undue problems while understanding the focused target without resource loss. By the implementation and use these controls, management is able to adapt within the economic changes and competitiveness while making sure regulations and laws are abided by. In business there is a simple fact of life which is, everyone is not an honest person. In business this includes employees along with customers to the organization and or business. Internal controls which are implemented in a correct manner can help the company identify cost consuming employees with unethical behavior and poor management style. There are times that mistakes happen and are a true mistake or error....
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...Effect of Unethical Behavior Article Analysis ACC/291 This paper will analysis different situations that might lead to unethical practices and behavior in accounting. This paper will also examine the effects of the Sarbanes-Oxley Act of 2002 on financial statements. Accounting could be described as a type of instrument or dialectal put in order to provide information with regards to the financial position of an organization or business. This type of information is very important to investors as it gives them important and detailed information that could turn out to be the determining factor as to their decisions to invest or not to invest in a specific organization. Consequently, it is not unusual to find unethical behavior in accounting as unethical practices come in different practices. Different situations that might lead to unethical practices in accounting could include misrepresentative financial analysis in order to obtain personal gains, mismanagement of funds, embellishing revenue, purposely providing wrong information in regards to expenses, embellishing the value of corporate assets, purposely providing wrong information in regards to liabilities, bribery, manipulation of financial markets, and lastly inside trading. According to Osanyin 2008 “Two well-known examples of unethical practices in accounting are those of the 2002 Enron / Andersen and the WorldCom scandal. Both of these companies were involved in unethical accounting practices.” Although Enron...
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...Sarbanes-Oxley Act.2002 Darrell Kelley LAW/412 June 27,2013 Mark Reed Sarbanes-Oxley Act.2002 In this essay one will be discussing Enron, the illegal activity of Enron and the establishment of the Sarbanes-Oxley act 2002. Also one Discusses the ethical views in todays business world and the criminal penalties that the Sarbanes-Oxley Act provides Enron was an American energy business in commodities and services company based out of Houston, Texas. Enron was a rapid growing corporation that organization goal was in producing natural gases, communications, electricity, pulp and paper with was once believed to have had employed approximately over 18,000 employees (Frontain). With monopolizing in such resource ventures Enron was once believed to have made well over 100 hundred billion dollars in revenue. In the height of Enron’s success of banking in million of dollars through out their empire there were also faulty accounting be done internally. Thousand to millions of dollars being signed off to hire up E of the company leading to questioning of the money (Frontain), account scandals and audits. By the early 2000’s Enron was in over their head in fraudulent financial documents, having less than enough funds to payback what was owed, as well keeping employees on payroll Enron made the move of filing bankruptcy leaving whatever ethical, moral responsibility they have had abandoned. With Enron’s fraudulent financial secrets and bankruptcy being brought...
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...business events and information processing systems. ANS: T 7. An information system consists of an integrated set of computer-based and manual components established to provide information to users. ANS: T 8. Internal control is a process that provides complete assurance that the organization is meeting its objectives, such as efficiency and effectiveness of operations and reliable reporting. ANS: F 9. The Sarbanes-Oxley Act of 2002 has dramatically changed the daily work of financial accountants and auditors. ANS: T 10. According to the Sarbanes-Oxley Act of 2002, management must identify, document, and evaluate significant internal controls. ANS: T 11. According to the Sarbanes-Oxley Act of 2002, management must audit and report on auditors’ assertions about the organizations’ systems of internal controls. ANS: F 12. According to the Sarbanes-Oxley Act’s Section 409, material changes in the organization’s financial condition must be disclosed to the public on a rapid and current basis. ANS: T 13. The Sarbanes-Oxley Act’s Section 404 creates...
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...Date: The Sarbanes-Oxley act was enacted in the congress after a financial scandal which affected a number of companies and led to the loss of many billions of dollars owned by shareholders in the respective companies (Fletcher & Plette, 2008). To illustrate the severity of the matter under study, the essay shall use the case study of one of the culpable companies Enron which necessitated the drafting of the act by Sarbanes and Oxley. Enron applied for deregulation which meant that the company was not liable to comply with the stipulations of the government in relation to the submission of financial records. Due to deregulation, only the Enron executives had the mandate to inspect the financial records and as a result they resulted to the manipulation of the records so that they could dupe investors into investing in the company. They concealed all reports in the financial records which captured the presence of losses in the prior financial years. The company misrepresented the total earnings and revenue and continued to embezzle the revenue provided by investors. Consequently, the investors lived under the perception that the company was making profits and as a result more investors invested in the company for the financial gains. The executives of the company used the money for their personal gains which led to the discovery of the fraud since the company was approaching bankruptcy in 2001 (Sterling, 2002). Sarbanes-Oxley act gives the Public Company Accounting...
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...be driven by non-market forces when pay to athletes, lawyers and other groups have increased just as much. Their pay is strongly related to stock performance. Kaplan's recent analysis of CEO pays in a given year found that CEOs in the top 20% of actual pay generate stock returns 60% greater. This is greater than other firms in their industries over the past three years. In addition, CEOs from firms in the bottom 20% of actual pay underperformed their industries by almost 20% over the past three years. Furthermore, most of the financial CEOs compensation is tied directly to the stock price and since the demise of those sectors; many CEOs have lost millions, if not their job! In this Essay we are going to look at all the factors CEOs go through from fraud, Sarbanes-Oxley Legislation and the difficulty corporations are faced...
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...Welcome to WritePoint, the automated review system that recognizes errors most commonly made by university students in academic essays. The system embeds comments into your paper and suggests possible changes in grammar and style. Please evaluate each comment carefully to ensure that the suggested change is appropriate for your paper, but remember that your instructor's preferences for style and format prevail. You will also need to review your own citations and references since WritePoint capability in this area is limited. Please see the other helpful writing resources in the Tutorials and Guides section of the Center for Writing Excellence. Thank you for using WritePoint. Running head: Corporate Compliance Plan for Riordian Corporate Compliance Plan for Riordian Robert Trujillo University of Phoenix Corporate Compliance Plan for Riordian Riordian Manufacturing Inc. makes plastic products through the process of plastic injection molding. The main industries that use Riordian products are automotive parts manufactures, aircraft manufactures, aero space manufactures, beverage manufactures, and home appliance manufactures. The company’s annual revenues are $46 million. The company employs 550 people throughout three plants located in Georgia, Michigan, and China. Research and development is done at the corporate headquarters in San Jose, California. In 2000, Riordian Manufacturing Board of Directors decided to expand its...
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...Internal Controls Essay Carole Crews Accounting 1010 section 6 Let’s first talk about what “internal control” means. It is a process that helps to protect the assets of a company whether that asset be money, equipment, or merchandise. What are the objectives of internal controls? • Safeguard assets (accounting) such as cash or merchandise from loss or theft • Compliance (administrative) of laws and regulations • Accomplishment of goals (internal) of sales, profits • Reliability and integrity of data (accounting) • Economics (administrative) The two most important are the accounting controls There are five areas of internal control: • Control environment • Risk Assessment • Control activities • Information and communication • Monitoring A system of internal control relies on the people who implement it. Human error, or purposeful collusion and a failure to recognize changing conditions can all lead to a system failure. Examples of internal controls 1. Separation of duties For any asset or any transaction you should separate the following jobs: Custodian…Those who have actual physical or financial control of the asset or transaction. For example anyone allowed to write checks should not have access to the journal books. People who have access to cash should be specifically designated and their number limited. If they have access to cash, the employee should be bonded. Recordkeeper… The person or persons...
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...he Sarbanes-Oxley Act of 2002 was signed into effect by president George W. Bush on July 30, 2002. This bill received the nickname and acronym SOX, and its intentions were to make sure that the publicly reported financial information was reliable in order to boost the confidence in the United States capital markets after the great depression. This act contains punishments for corporate boards, executives, auditors, attorneys, and securities analysts who fail to honor this act. What is interesting about this particular act is that even the private and nonprofit organizations are faced market pressures to comply with these particular standards. There are eleven titles within this bill and consists of a total of sixty-six sections. The titles of the bill...
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...Test Correlation Table Question Types/Level of Difficulty |LEARNING OBJECTIVES | |Easy |Moderate |Difficult | |1. Explain the foundations of control. |TF |1, 3 |2, 4, 5, 7 |6 | | |MC |1, 5, 7, 10, 13, 16, 23, |2, 6, 8, 9, 11, 12, 14, |3, 4, 20, 27, 30, 31, 36,| | | |24, 34 |15, 17, 18, 19, 21, 22, |37 | | | | |25, 26, 28, 29, 32, 33, | | | | | |34, 35 | | | |ES |— |1, 2, 3 |— | |2. Identify the six phases of the corrective |TF |10, 11, 13, 15, 16 |8, 9, 17, 18 |12, 14, 19 | |control model. | | | | | | |MC |39, 43, 49, 51 |38, 42, 44, 45, 46, 50 |40, 41, 47, 48 | | ...
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