Accounting Essay Example: Review the Provisions of the Sarbanes-Oxley Act of 2002

2021-06-28 15:23:09
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501 words
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University of California, Santa Barbara
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The critical gap in accounting education mainly comprises of agreements, guidelines and principles that many accountants are able to follow, especially when briefing and recording the financial statements of their business (Turner, et al. 2011). Accounting has become a key discipline because it now functions as the language associated with business. Accounting has faced many problems in terms of evaluating the accounting courses that are offered by professional institutions. This is because in many countries, accounting education lack harmonization between industries and academics, hence it becomes uneven (Bryant and Albring, 2013).

The Sarbanes-Oxley is a federal law, which is an inclusive review of business practices reform. The lac that was enacted in the year 2002 specifically aims at public accounting companies that perform audits of organizations and was passed due to the numerous corporate accounting scandals which had taken place around that period (Saint Leo University, 2014). The provision of Auditor Independence had the most impact because it is at the center of the whole process. As it is directed by the Act as well as under the general rulemaking body of the Commission, it strengthened its rules concerning the independence of the auditors so that their work cannot be compromised. Nevertheless, I think the provision of Improper Influence on Editors is not necessary and looks like a duplication of that of Auditor Independence. This is because the auditors are made or let with their independence to do their work, there would be no improper influence on them as stipulated by the provision. However, I believe that a provision that would have been added to make it influential is one that sets out candidly the repercussions of improper accounting practiced. This should be standardized across all jurisdictions so that it cannot happen even beyond borders.

Among the widely highlighted violation in as far as accounting ethics is concerned involved Enron Company, which is a multinational firm that had not shown a realistic view of its financial statements for many years. Their auditor is actually argued to have been signing off the validity of the multinational firms accounts notwithstanding the inaccuracies within its financial statements. When the given unethical practices were finally discovered, not only did Enron go out business but they also dissolve the auditor. Enron Companys shareholders lost an amount of money approximated at about $25 billion owing to the multinational firms bankruptcy. On the other hand, even though only a few of the auditing firms staff were involved in the Enron scandal, the shutting down of the auditing firm resulting in a loss of about 85,000 jobs. Worldcom is another company based in the US, which was rocked by massive accounting scandal. The company created billions in illusory revenue, which led to its CED Ebbers receiving 25 years imprisonment.

 

References

Bryant, S. M., and S. M. Albring. (2013). Effective team building: Guidance for accounting educators. New York: Prentice Hall. Press.

Saint Leo University . (2014). Financial and Managerial Accounting (custom). Boston, MA: Pearson Learning Solutions.

Turner, K.F, et al. (2011). Accounting Education in Crisis, New York: Oxford University

 

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