Re: Week 5 Reflection ________________________________________________________
This week marks the final week for this course. Team 5 has discussed the ethical implications involved with accounting principles and the importance of having regulations in place in order to maintain accuracy. The following addresses some situations that may lead to unethical accounting practices as well as the effects of such behavior. The Sarbanes-Oxley Act is also addressed because of its important role of regulating accounting practices.
There are certain circumstances that can lead people to perform unethical accounting practices. If a person is dealing with financial strains in his/her personal life, has the ability and knowledge, it is possible to manipulate financial information of a corporation, this could lead to temptation. Mere greed is another motivator in unethical behavior. In any case, a person, or persons, convinces themselves that what they are doing is okay and they deserve it. …show more content…
Some of the effects for companies and people who do unethical behavior regarding Sarbanes-Oxley Acton the financial statements will suffer huge consequences.
It is also based on the section of the act that may be out of compliance. Non-compliance penalties may range from the loss of D&O insurance and also the loss of exchange listings and to multi-million dollars in fines and imprisonment. This could affect the lack of investor confidence also. The CFO or CEO who may submit the incorrect certification may be subject to a fine to $1 million dollars and/or imprisonment for up to 10 years. Also if the incorrect certification was submitted “willingly” then the fine can increase up to $5 million dollars and/or imprisonment could increase to 20
years.
The Sarbanes-Oxley (SOX) Act was enacted to protect employees who may want to report misconduct in the workplace from retaliation, and also to protect investors from fraudulent accounting practices used by corporations. All organizations must comply with the SOX Act. The SOX Act was in response to the downfall of many large corporations in the early 2000’s. Large companies including Enron and WorldCom were doctoring their accounting presentations to make their companies look like they were doing better financially than they actually were, causing many investors to lose money.
This summary has discussed the struggles and concerns team C found while learning and discussing the ethical implications that are involved in accounting and how the importance of putting in place regulations to maintain accuracy can effect accounting. Team C discussed the Sarbanes-Oxley Act and how this act is important in the role of practicing accounting.