Unethical Practices and Behavior in Accounting
Unethical Practices and Behavior in Accounting
The Sarbanes-Oxley Act of 2002 (SOX) was created to prevent fraudulent financial activities, and to provide investors with more accurate financial resources on corporations. Under SOX, companies are held accountable if they fail to maintain the requirements that were set forth in the act. The act requires companies to maintain satisfactory internal control measures, provide responsible financial reports, disclose periodic reports, and establish rules for annual reporting. (Hazels, 2010) These requirements are all part of the Generally Accepted Accounting Principles (GAAP). Corporations and accounting firms should have already been practicing these principles to uphold ethical behavior. However, the governing bodies charged with monitoring of corporate finances as well as their practices were outdated and that necessitated the reforms outlined in the Sarbanes-Oxley Act of 2002.
The Sarbanes-Oxley Act’s Effect on Financial Statements The Sarbanes-Oxley Act of 2002 has several sections that effect financial statements, reporting of finances, and other requirements that are placed on organizations. “Section 302 gives corporate responsibility for financial reports. This Section requires that the "principal executive officer or officers and the principal financial officer or officers, or persons performing similar functions, certify in each annual or quarterly report filed or submitted" that the signing officer reviewed the report, that based on that officer's knowledge, the statements contain no fraudulent or misleading information, that the financial statements and other financial information fairly present all material aspects of the financial conditions and results of operation and that the signing officers have disclosed any fraud, material or not, to auditors and the audit committee.” (Hazels, 2010) There are other sections of SOX that deals with establishing rules for corporations in regards to their
The Sarbanes-Oxley Act of 2002 (SOX) was created to prevent fraudulent financial activities, and to provide investors with more accurate financial resources on corporations. Under SOX, companies are held accountable if they fail to maintain the requirements that were set forth in the act. The act requires companies to maintain satisfactory internal control measures, provide responsible financial reports, disclose periodic reports, and establish rules for annual reporting. (Hazels, 2010) These requirements are all part of the Generally Accepted Accounting Principles (GAAP). Corporations and accounting firms should have already been practicing these principles to uphold ethical behavior. However, the governing bodies charged with monitoring of corporate finances as well as their practices were outdated and that necessitated the reforms outlined in the Sarbanes-Oxley Act of 2002.
The Sarbanes-Oxley Act’s Effect on Financial Statements The Sarbanes-Oxley Act of 2002 has several sections that effect financial statements, reporting of finances, and other requirements that are placed on organizations. “Section 302 gives corporate responsibility for financial reports. This Section requires that the "principal executive officer or officers and the principal financial officer or officers, or persons performing similar functions, certify in each annual or quarterly report filed or submitted" that the signing officer reviewed the report, that based on that officer's knowledge, the statements contain no fraudulent or misleading information, that the financial statements and other financial information fairly present all material aspects of the financial conditions and results of operation and that the signing officers have disclosed any fraud, material or not, to auditors and the audit committee.” (Hazels, 2010) There are other sections of SOX that deals with establishing rules for corporations in regards to their