Effect of Unethical Behavior Article Analysis

Effect of Unethical Behavior Article Analysis
Many occupations have the potential for unethical behavior in the workplace. The accounting profession specifically can have an enormous impact on an organization. In many cases this impact can affect other companies and even the general public.
Unethical behaviors in the accounting industry are often difficult to detect. Some of the more common items include understating or not reporting liabilities, exaggerating income or other revenue, understating operating or other expenses, and exaggerating assets. These behaviors also include kickbacks, insider trading, embezzlement, and bribery. With individuals, the most common items are misuse of funds and providing misleading information on financial reports for personal gain.
Many of the issues we face with the current economy are blamed on the unethical behavior in the accounting industry. Two of the most famous companies that were eventually caught and prosecuted for unethical accounting behaviors were WorldCom and Enron. The falsification of financial statements and fraudulent activity in the stock market causes thousands of public investors to lose money. During these scandals, some of the people inside the companies were earning millions of dollars at the expense of others. The Sarbanes Oxley Act of 2002 or commonly referred to as Sox is named after Senator Paul Sarbanes and the Representative Michael Oxley. Sox was introduced to law in 2002 and brought with it new government regulations regarding the methods of financial operations of organizations. Accurate and timely financial reporting is two of the major keys to the success of Sox ("Sarbanes-Oxley Act Section 401", 2003). The effect of Sox on financial statements requires them to be accurate and not to be misleading by containing incorrect statements.