Accounting Ethics

In: Business and Management

Submitted By uppity2
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Anytime you are dealing with money and accounting there is always a myriad of ethical issues. Some people will do anything to propel themselves into financial wealth. However in today’s accounting world I believe there are numerous standards and policies that lend themselves to create an ethical rich environment. One endeavor known as the Sarbanes-Oxley Act revolutionized the accounting industry adding such measures as requiring the leadership of corporations to certify the accuracy of each individual financial statement to restore the faith of investors in a time period that was rocked with scandals from Enron to Tyco. The act primarily prescribed “disclosure as the cure” for a troubled economy implementing numerous independent checks and balances designed to provide appropriate oversight, transparency, and objectiveness. Another part of this disclosure concept was the increased protection afforded to whistle-blowers which is key for getting an ethical breach to the public or appropriate officials. (Kuschnik, 2008) Proof that Sarbanes-Oxley Act is making a difference today is in a survey conducted by Protiviti Risk and Business Consulting which found that “nearly 70 percent of respondents in our survey reported that the internal control over financial reporting structure in their organizations has improved since compliance with Sarbanes-Oxley Section 404 became a requirement.” (Cohn, 2012).
Enron is a perfect example of a pre-Sarbanes-Oxley Act company which had wide reaching ethical breaches which eventually bankrupt the company and swallowed investors. Enron was one of the largest energy companies in the 1990’s and into 2000 with revenues climbing to nearly 100 billion before it’s demise. Throughout Enron’s climb to glory Jeffrey Skilling (President) and Andrew Fastow (Chief Financial Officer) worked together to creatively obscure billions in loss and…...

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