...Unethical Behavior Analysis ACC/291 Unethical Behavior Analysis “The Sarbanes-Oxley Act of 2002 was intended to improve corporate governance and increase the transparency of financial audits” (Cosgrove, 2006). This was an effort to help curb unethical behavior in the corporate world. The effort was worth it, considering that “that 18% of employees perceived their companies as having a strong ethical culture - more than double the 2007 rate” (Bannon, 2010). This still does not stop all unethical behavior in the workplace. There are several reasons that unethical behavior takes place, but today we will focus on one…following your superior’s example. Superiors Behavior Employees will look to their immediate supervisor to determine what behaviors are allowable. If the supervisor is a no nonsense by the book leader, then the associates will know that they better do the same or face the consequences. And on the other hand if the supervisor is known to work around the rules, then their example is showing that it is acceptable to not follow all the rules. If a supervisor tells an employee that they don’t care how a task is done as long as it is done in the allotted amount of time or as long as the company or section looks good. It opens doors for unethical behavior, such as manipulating the numbers on financial reports to show better figures than are actually there. The Sarbanes-Oxley Act of 2002 By having guidelines for proper auditing set by...
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...sales happen online. So why could this competition between two of the largest retailers cause unethical practices and behavior in accounting? Wal-Mart is “considering using its own shoppers as delivery people, providing some kind of incentive to drop off online orders on their way home from the store.” (Heller, 2013) However, this has way too many unknown variables and implications such as taxes and accounting techniques. For example, how would you account for a loss of merchandise for a customer who instead of delivering the product on the way home decided to keep it for him or herself? What adjusting entries would have to be made and where? Wal-Mart could be tempted adopt unethical accounting practices to keep up with Amazon’s booming sales. Most of Amazon’s sales already come with free shipping. Wal-Mart offers free delivery to one of their locations where the customers pick up their merchandise, but not free shipping. Greed and opportunity might lead to either Wal-Mart or Amazon to get involved in unethical accounting practices. This is especially true if an accounting lie could give an edge over the competition. Ignorance in accounting cannot be used by either Wal-Mart or Amazon because these are two large corporations and they have plenty of resources available to ensure they follow accounting rules. Wal-Mart might not be the only one at risk for practicing unethical behaviors in accounting. The Marketplace Fairness Act is soon going to be enforced and all Internet sales...
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...After watching the video, I found that Brian exhibited many unethical behaviors. To begin with, he was playing a video game not only on company time but on the company computer. He also made mention of accepting gifts, including the jacket he displayed, from vendors and stated this was a common occurrence. It was made clear by Regina that accepted gifts from vendors are against company policy. Brian also discussed using the company’s petty cash fund to pay for dinner and drinks with vendors, which is also against company policy. Not only does Brian use petty cash for entertainment with vendors, but he alluded to the fact that he prefers to use it for movies and Starbucks. In the last scene, Brian uses the computer printer for personal...
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...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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...Article Analysis on Unethical Behavior and its Effects Article Analysis on Unethical Behavior and its Effects ACC 291 Article Analysis on Unethical Behavior and its Effects Possible functions and actions resulting in dishonest tactics and unethical behavior within accounting are obvious. These kinds of actions are usually in breach of the Sarbares Oxley Act of 2002 (SOX). An available article inside the university student library website is going to be examined to be able to determine possible elements resulting in dishonest practices plus behavior. This content examined is known to as “Becoming a far more Relational Firm inside the Publish-Sarbans-Oxley Era”. As shown by the content, the effects of SOX have altered company practices in accounting which companies now use third party auditing services (Jelinek, Jelinek, 2010). The SOX act has changed conditions by which to disallow a business to purchase or trade services straight to business employees (Jelinek, Jelinek, 2010). This has triggered companies needing to go a third party panel to be able to purchase and trade services (Jelinek, Jelinek, 2010). The act also necessitates the third party auditor agencies to resale from services shortly after five years and not allow them to seek employment having a previous client within of the year of last audit (Jelinek, Jelinek, 2010). These brand new rules have triggered the companies to possess very strict rules of operation methods. Using the information acquired within...
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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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...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 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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...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 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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...Impact of Unethical behavior Article Analysis The Sarbanes Oxley Act was passed in 2002 as a result of plenty of corporate scandals. The purpose of this act was not only to defend investors and provide them with accurate and reliable information but also make companies and employees behave ethically and with integrity. After the law was passed the financial statement have been impacted and corporate managers are more involved but is the law 100% effective? Many businesses argue that the implementation and ongoing requirements of Sarbanes Oxley Act are costly, time consuming, and as yet ineffective. In many instances law has at best led to a culture of compliance rather than a culture of integrity. Brooke Corporation is one example where these laws have seemingly failed. Brooke Corporation was once one of the largest franchisors of property and casualty insurance in the United States. Its main focus was selling insurance and other products through its franchisee locations. According to Beth Hazel (Journal of Business Case Studies, 2010) the laws as they exist today create a corporate environment focused on compliance instead of integrity. In Brooke Corporation the senior management was in charge to set the example of the organization culture. His main focus was on making money and not, apparently, behaving with integrity. Brooke’s business model required that all insurance companies pay commissions to Brooke directly and not to the agent. Brooke then withheld any expenses...
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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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