...Effect of Unethical Behavior Article Analysis ACC/291 This paper will analysis different situations that might lead to unethical practices and behavior in accounting. This paper will also examine the effects of the Sarbanes-Oxley Act of 2002 on financial statements. Accounting could be described as a type of instrument or dialectal put in order to provide information with regards to the financial position of an organization or business. This type of information is very important to investors as it gives them important and detailed information that could turn out to be the determining factor as to their decisions to invest or not to invest in a specific organization. Consequently, it is not unusual to find unethical behavior in accounting as unethical practices come in different practices. Different situations that might lead to unethical practices in accounting could include misrepresentative financial analysis in order to obtain personal gains, mismanagement of funds, embellishing revenue, purposely providing wrong information in regards to expenses, embellishing the value of corporate assets, purposely providing wrong information in regards to liabilities, bribery, manipulation of financial markets, and lastly inside trading. According to Osanyin 2008 “Two well-known examples of unethical practices in accounting are those of the 2002 Enron / Andersen and the WorldCom scandal. Both of these companies were involved in unethical accounting practices.” Although Enron...
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...Effects of Unethical Behavior Article Analysis ACC/291 July 8, 2012 Effects of Unethical Behavior Article Analysis Ethical practices and behaviors are different for everyone. In order to identify what might lead to unethical practices and behaviors in accounting, it is necessary to examine who is in control. Some individual may look at what can be done versus what are legally acceptable accounting principles and behaviors. The Sarbanes-Oxley Act of 2002 was enacted by United State Congress to protect investors from the possibility of fraudulent accounting activities by corporations. This created a world wind of anxiety for corporate executives. Section 302, a mandate which require senior management to certify the accuracy of the reported financial statement. Corporations were mandated with strict reforms to improve financial disclosures and prevent accounting fraud. Internal controls by management were of special concern and so a section of the Act called Section 404 was imperative for upper management. They must not only certify the company’s financial reports, but must now take full responsibility for any erroneous or misleading statements. Management and auditors must establish internal controls and reporting methods on the adequacy of those controls. For publicly traded companies, Section 404 had costly implications, as it is expensive to establish and maintain the required internal controls. According to Investopedia.com, the scandals with Enron...
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...Effect of Unethical Behavior Article Analysis Effect of Unethical Behavior Article Analysis There are many types of unethical behavior that can occur within organizations: forging financial information for personal gain, overstating assets or revenue, misstating expenses, and not including liabilities, to name a few. For these reasons and more, Congress enacted the Sarbanes-Oxley of 2002. Effect on Financial Statements The Sarbanes-Oxley Act, or SOX Act, is known mainly for Section 404, which outlines three issues that summarize the reason the SOX Act exists. First, it requires that management create reliable internal financial controls; second, it requires that management attest to the reliability of those controls and the accuracy of the financial statements that result from these controls; and last, it requires an independent auditor to further attest to the statements made by management (The Sarbanes-Oxley, 2005). These measures ensure that organizations use the same rules and regulations to report financial information while making higher ups responsible for the information reported. At this time, CEOs came to at the forefront of financial dealings within the company instead of staying behind the scenes; the SOX established the boards of directors to oversee CEO dealings while making the audit committee oversee the dealings of the board of directors. This, however, proved costly for many companies because of the extra workforce and IT systems...
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...ACC291 Effect of Unethical Behavior Article Analysis Ethics has long been a word that has several different meanings to different people. With most it means what “should” be done in various situations. It does not necessarily mean that it is illegal not to do what it considered ethical. Throughout history people have tried to justify the things they have done to make it seem as they had the best interest of those around them at heart. Unethical behavior can be exhibited in many areas of our lives such as in our communities, churches, and especially in our businesses in the accounting office. Life is an ever-pressuring force that sometimes will contribute to unethical behaviors in the accounting field. Sometimes those that exhibit unethical behavior in accounting will do so in an effort to keep their jobs. They may feel that if they don’t conform and get the numbers that their supervisor wants they can be replaced. Others may do it for personal gain; it is possible that they will get kickbacks if the company does well. This can be done if they overstate the value of the company’s assets and/or underreporting the liabilities. This behavior can make a company look more profitable than it really is and can cause millions of people to invest and ultimately lose their investments based on a fudged report. In the accounting field there are many unethical practices that can lead to hardship in the life of many. Many of these practices were brought out of the shadow when Enron...
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...Effect of Unethical Behavior Article Analysis Accounting scandals grew increasingly in the early 2000’s. Due to these scandals Senator Paul Sarbanes and U.S. Representative Michael Oxley sponsored a bill that is now known as The Sarbanes-Oxley Act of 2002. They refer to this bill as the SOX act. The reason this law was passed was to help eliminate the fraudulent activity that was taking place within the companies that are traded publicly in the United States. The Sarbanes-Oxley Act of 2002 holds those individuals accountable for unethical acts and behavior. This act makes it so that companies are now required to provide an accurate balance sheet that is deemed verifiable. Accounting practices of businesses are now more transparent and this is due to the Sarbanes-Oxley Act of 2002. This act ensures all businesses have true and correct financial statements (Sox Law, 2006). Unethical practices and or behavior in accounting would be described as any act that knowingly is taking away from profitability of a business. The examples are as follows: falsely reporting financial statements, stealing, and inputting data incorrectly. In order to control the unethical behavior taking place in the workplace, companies can implement internal controls measures. These are checks and balances that will ensure accurate reporting of information. Many organizations utilize the internal controls system to ensure employee honesty. Internal controls also maintain productivity for their employees...
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...Effect of Unethical Behavior Article Analysis ACC/291-Principles of Accounting II June 24, 2013 Dale Wilson Having the correct accounting information in a financial statement gives a business owner certain advantages, such as information on financial transactions. If a business owner has information on when the sales or expenses are increasing or decreasing, he can make decisions that can benefit the company’s bottom line. The same cannot be true if he does not have accurate, or reliable, accounting information. There are also times when having accurate accounting information can lead to unethical practices in accounting because the information in the financial statement may not be beneficial for the business or the shareholders. Such instances made it necessary for the government to enact legislation that makes such practices illegal. There are many situations that might lead to unethical practices and behavior in accounting. Misuse of funds, insider trading, bribery and providing misleading financial information for personal gain are all examples of how businesses participate in unethical practices and behavior in accounting, all of which can lead to the inclusion of incorrect information in a financial statement. Prior to 2002, investors had no protection against corporations that failed to fully disclose financial information. This led to some of the biggest corporate fraud cases, involving companies like Enron and WorldCom. In 2002, because of the unethical practices...
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...Effect of Unethical Behavior Article Analysis ACC/291 December 23, 2012 Angela Giattino Effect of Unethical Behavior In late 2009 most of America, along with the company that I work for was suffering from an economic downturn. The future of company coming out of this unfortunate event was slim to none. Our company is a car prep company that prepares vehicles for brochure and commercial still and video shoots. Most of our clients are automotive manufacturers, and our largest client at that time was General Motors. General Motors was in the midst of filing for bankruptcy and the government stepped in to bail the large corporation out of its financial crisis. Many companies that worked with General Motors walked away from that business and took a loss. Our company on the other hand, took the wildest roller coaster ride that not only hurt us but also saved us. During this time the company laid-off many employees and stopped paying its debt for over a year just to stay afloat, including our lease payments for the building we occupy. One would think that the landlord would have thrown the company out of the building. Rather worked out an agreement with the owner of the company to allow him to get back on his feet with the terms that he would repay any monies when the company was once again stable. When both the owner of the business and the landlord realized that the company was in bad shape, the landlord agreed to cut the outstanding balance of more...
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...Effect of Unethical Behavior Article Analysis Ethics: A consciousness of moral importance, a set of moral issues or aspects, the principles of conduct governing an individual or a group, a set of moral principles. To have ethical values is to have a deep sense of responsibility to self and to others (Webster’s Dictionary). When employees practice unethical behavior in the workplace, they are in a sense, displaying a lack of respect not only for themselves, but showing a great deal of disrespect for the company the employee work for. This can further be complicated when dealing with the funds of a company. The repercussions not only affect the company, but also clients, and employees. No greater case has proven this like the Enron Scandal. Enron was an energy trading and communications company based in Houston, Texas. Enron employed 21,000 people by June 2001. Enron was accused of misrepresenting the earning reports. Enron lied about its profits as well as rumors of a number of shady dealings. Enron was also accused of concealing debts so that these debts did not show up on the company's accounts records. There were also rumors of embezzlement of funds from the executives. Shares from Enron dropped from over $90 in the United States to $0.30. This was kept from all investors as well as potential investors who invested in Enron because the inflated financial gain the company was reporting. Due to these unethical accounting practices, it cost both trustees and employees...
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...Effect of Unethical Behavior Article Analysis Lindsey Davison August 26, 2013 Acc/291 Jonathan Gillen Effects on Financial Statements When the Sarbanes-Oxley Act was implemented in 2002, it impacted a lot of publically traded companies. There were many companies that were using unethical practices to boost their numbers and give the top dogs of the company’s loads of money. Companies like Enron, Tyco, and WorldCom were companies that most of us heard about getting hit the hardest once the act was put into place. The Sarbanes-Oxley Act created a Public Accounting Oversight Board to ensure that financial statements are audited according to specific standards. This makes it to where those who are in top financial positions such as Financial Executives and Chief’s are held directly responsible for what is being reported to the SEC. With that being said, the Act also makes it to where the audits aren’t in complete control of those in top positions, so they can’t audit their own work basically, which is exactly how the above mentioned corporations got away with it for so long. There have been both positive and negative effects of the Act; positive effects are that investors are more confident in making solid investments (Fass, 2003). Some negative effects are that companies are spending a lot of time, money and concentration on updating their software to be up to par on the new standards, like the Section 404 certification (Fass, 2003). Those are just minimal if you...
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...Effect of Unethical Behavior Article Analysis Travis Murphy ACC/291 August 17 2013 Professor Kelly Bair A very common example of an unethical accounting practice is the misrepresentation or false recording of figures. Accountants will do this to cover up situations and complications that have hampered the company. Accountants believe that the occurrence or occurrences will soon improve so that falsifies the numbers to put a band aid on the wound until it hopefully heals. What occurs sometimes though is if the numbers were recorded accurately and were communicated through management, the company would most likely recover sooner. If the band aid is put on the issue for an extended period of time there might be no recovery from the issue and the accountant could be fired, or worse, the company could go under. Another situation for misrepresentation of figures could be from hiding money, which is fraud, in relations to taxes or personal gain. The consequences for this are of course a hefty fine and imprisonment. Companies do this very frequently but not all get caught. Companies and accountants will do this to try and squeeze every dollar into their budget and in to their pocket at the end of the year. But thanks to the Sarbanes-Oxley Act of 2002 accountants and company have no choice but to be more accountable for their actions. “Since its enactment in the summer of 2002, the Act has effected dramatic change across corporate America and beyond, and is helping to...
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...ACC 291 WEEK 5 INDIVIDUAL EFFECT OF UNETHICAL BEHAVIOR ARTICLE ANALYSIS To purchase this visit here: http://www.nerdypupil.com/product/acc-291-week-5-individual-effect-of-unethical-behavior-article-analysis/ Contact us at: nerdypupil@gmail.com ACC 291 WEEK 5 INDIVIDUAL EFFECT OF UNETHICAL BEHAVIOR ARTICLE ANALYSIS Write a 350- to 700-word article analysis in which you identify situations that might lead to unethical practices and behavior in accounting. Examine the effect of the Sarbanes-Oxley Act of 2002 on financial statements. Cite one article from the Electronic Reserve Readings, the Internet, or other resources. Formatyour paper consistent with APA guidelines. Home Work Hour aims to provide quality study notes and tutorials to the students of ACC 291 Week 5 Individual Effect of Unethical Behavior Article Analysis in order to ace their studies. ACC 291 WEEK 5 INDIVIDUAL EFFECT OF UNETHICAL BEHAVIOR ARTICLE ANALYSIS To purchase this visit here: http://www.nerdypupil.com/product/acc-291-week-5-individual-effect-of-unethical-behavior-article-analysis/ Contact us at: nerdypupil@gmail.com ACC 291 WEEK 5 INDIVIDUAL EFFECT OF UNETHICAL BEHAVIOR ARTICLE ANALYSIS Write a 350- to 700-word article analysis in which you identify situations that might lead to unethical practices and behavior in accounting. Examine the effect of the Sarbanes-Oxley Act of 2002 on financial statements. Cite one article from the Electronic Reserve Readings, the Internet, or other resources...
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...Effect of Unethical Behavior Article Analysis Ethics can be defined as “that branch of philosophy dealing with values relating to human conduct, with respect to the rightness and wrongness of certain actions and to the goodness and badness of the motives and ends of such actions.” ("Ethics," 2012). In the article Unethical Behavior In The Workplace, If takes a look at what are the things done to promote ethics but also how some situations just can’t be avoided when it comes to being ethical in accounting practices. We all learn at an early age what is right and wrong from our parents to teachers telling us so that when we are adults we can have morals and ethics in the world. Despite these best efforts of many, people and corporations still act unethical and although their crimes do not cause physical harm is does destroy people and companies in a much worse way and that is financially. Some situations I can tell from the article where people act unethical are “An accountant may embezzle funds from his or her employer for financial gain. Or perhaps the CFO of a publicly traded corporation may prepare financial statements to appear as though the company is performing much better than it actually is, because he or she wants their stock portfolio to increase.” (“Unethical Behavior In The Workplace,” 2008, para. ). Another one it shows an example is “failure for an accountant to conduct an in-depth analysis when preparing and revising financial information. There are many individuals...
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...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...
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...Effect of Unethical Behavior Article Analysis University of Phoenix Principles of Accounting 2 ACC/291 May 27, 2012 Effect of Unethical Behavior Article Analysis In this paper I will identify situations that might lead to unethical practices and behavior in accounting. I will also examine the effects of the Sarbanes-Oxley Act of 2002 on financial statements. Since the Enron scandal at the end of 2001 there have been several reports of unethical practices as well as poor behavior. So what exactly leads someone to report false information? In most cases that I have seen it usually begins with minor accounting infractions. When companies don’t perform well financially, stock holders may lose millions of dollars on their investments. The person in charge may decide to falsify the figures when reporting them to insure their position within their company. I believe the feel they can correct the numbers before anyone would notice. On the other hand, some CEO’s and financial officers are make bonuses and profits when they show how well a company is doing. Their own personal greed is the only thing that concerns them no matter how well the company is doing. It might be several top executives involved to just a couple of individuals, however the people who pay for their unethical decisions are the stock holders, employees and the public. The Sarbanes-Oxley Act was enacted July 29, 2002 and was named after U. S. Senator Paul Sarbanes and U. S. Representative Michael...
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...Word Article Analysis Unethical Practices in Accounting ACC/291 Principles of Accounting 2 Michaele Musters Instructor: Word Article Analysis of Unethical Practices in Accounting Ethical Practices and conducts maybe taken or act different by everyone, thus many times to identify unethical practices and behaviors, we have to see who is in control. It is essential to analyze what can be done, or thought what might be done against legally acceptable accounting principles and conducts. The Sarbanes-Oxley act of 2002, was enacted by The United States Congress to protect investors from fraudulent accounting practices, made by fraudulent executives in corporations. After the Scandal, the entire accounting world changed in many ways, that it created a new vision and ways of work. It sort of created a world of winds of anxiety for corporate executives and accountants. In the Sarbanes-Oxley act , there is a section call 302 that requires management to certify the accuracy of the reported financial statement. Then all corporations were forced to reform strictly to improve financial disclosures to prevent accounting frauds. After the Act, management introduced internal control in order to comply with all the Sarbanes-Oxley act requires for a corporations behavior. Today, all corporations are obligated to certify the company’s financial reports. They are also responsible and they must take full responsibility if there is a misleading, or fake accounting information...
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