Public Company Accounting Oversight Board , accounting homework help

Relax! Stop worrying about deadlines and let our professional writers help you. Hire an essay writer helper and receive a professional assignment before your deadline. We provide writing services for all types of academic assignments.


Order a Similar Paper Order a Different Paper

What lessons can we learn from the recent business
scandals? What ethical principles were violated and what can be done to lessen
the chance of future business scandals? There are many factors that contributed
to the high‐profile business scandals
such as Enron, WorldCom, Madoff, real estate, and the savings and loan failures.
Some of these factors and the lessons we can learn from them are:

  1. Lack of tone
    at the top levels of an organization
    . Ethical behavior in business begins at the
    top—management must set an example of ethical behavior and make it known that
    ethics is important in the organization. The top officials in recent scandals
    acted improperly and therefore set a tone indicating that ethics does not matter
    in the company. If the top people in an organization feel that ethics is
    important then employees will follow the lead and consider ethical issues in
    their business decisions.
  2. Conflict of
    audit and consulting roles of accounting firms
    . CPA firms are no longer permitted to be both an
    auditor and a consultant for a company. Auditor independence is more closely
    scrutinized under the new regulations that took effect after the accounting
    scandals.
  3. Responsibility of top officers. New accounting regulations that were established
    after the business scandals require that the top officials of companies sign a
    statement that they assume responsibility for the accuracy of the financial
    statements and for the internal controls of the company. Before the new
    legislation some officers claimed that they had no knowledge of improper
    financial activities being conducted by other employees in the company. Now, it
    is the responsibility of top management to responsibility for and knowledge of
    all financial matters of the company.

  1. Government
    regulation cannot prevent fraud.
    The
    Security and Exchange Commission (SEC) had extensive regulation and reporting
    requirements, but the requirements were not able to prevent the fraud that
    occurred in recent business scandals. While the fraud was eventually detected,
    it was not prevented. Some would question whether increasing government
    regulation is needed in light of the inability of current regulation to prevent
    fraud.

  1. Fraud can
    happen even when good controls are in place.
    If someone is inclined to do something that is
    unethical or illegal, they may be able to get away with it at least for a while.
    Investors and others who rely on financial information should be alert for
    unusual or unreasonable information which may be inaccurate.

Having learned some lessons from recent business
scandals we may be better prepared to understand how they happened and what can
be done to improve the situation in the future. Congress passed new legislation
in response to the latest round of business scandals. The most important
legislation was the SarbanesOxley Act of 2002 which added many regulations for companies and
auditors. This is not the first time that the government has stepped in to
regulate the accounting profession. For example, the Securities and Exchange
Commission (SEC)
was established to regulate the stock market after some
unethical business practices. After the stock market crash of 1929, the SEC was
created in 1934 to restore public confidence in the capital markets. Let’s take
a look at the latest legislation—Sarbanes‐Oxley.

SarbanesOxley

As a result of the business scandals Congress changed
the rules for accountants by passing the Sarbanes‐Oxley legislation. The Sarbanes‐Oxley Act of 2002 contains the following sections:

  1. Public Company
    Accounting Oversight Board
  2. Auditor
    Independence
  3. Corporate
    Responsibility
  4. Enhanced
    Financial Disclosures
  5. Analyst
    Conflicts of Interest
  6. Commission
    Resources and Authority
  7. Studies and
    Reports
  8. Corporate and
    Criminal Fraud Accountability
  9. White‐Collar
    Crime Penalty Enhancements
  10. Corporate Tax
    Returns
  11. Corporate Fraud
    and Accountability

The Public Company
Accounting Oversight Board (PCAOB)
added many new regulations for companies
that trade stock on the public stock exchanges. The duties of the PCAOB are to:

  • register public
    accounting firms that prepare audit
  • establish
    auditing, quality control, ethics, independence, and other standards relating to
    the preparation of audit reports
  • conduct
    inspections of registered public accounting firms
  • conduct
    investigations and disciplinary proceedings and impose appropriate sanctions on
    registered public accounting firms
  • promote high
    professional standards and improve the quality of audit services offered by
    registered public accounting firms
  • enforce
    compliance with this Act
  • set the budget
    and manage the operations of the Board

The U.S. Supreme Court is
reviewing the Sarbanes‐Oxley legislation and may decide
reduce the authority of the PCAOB. If any Supreme Court rulings do affect the
Sarbanes‐Oxley legislation then Congress
would need to change the regulations. Perhaps an overall lesson from the
business scandals is that ethical behavior cannot be legislated. While ethical
standards and effective internal controls can increase the likelihood of ethical
behavior, making rules and regulations can never completely prevent
fraud.

Discussion Questions

  1. How can
    companies improve the ethical behavior of employees within the organization? Do
    you think that ethical behavior makes a company more successful?

Great students hand in great papers. Order our essay service if you want to meet all the deadlines on time and get top grades. Professional custom writing is the choice of goal-focused students. Word on the online streets is... we're simply the best!

Get a 15% discount on your order using the following coupon code SAVE15


Order a Similar Paper Order a Different Paper