Wal-Mart‘s earnings and financial quality and report how this process relates to the ethics of professional accountancy.

Most public companies are required to file its financial documents and annual reports with the SEC. To ensure that they are complying with both the financial and ethical guidelines ethical consistent with professional accountancy practices. Generally, companies like Wal-Mart posts ethical policies and procedures both in their stores and on their website. The SEC regulation remains constant; a company has the option of the process it uses to comply with the regulations. The financial health of a company can be determined by analyzing a company’s financial performance and ratios computed over two to three years.
Organizations today are different from those in the past; the days when a person would work at the same company until retirement are long gone. Most people desire to work for a company that is people focused, diverse, successful, and conducts business in an ethical manner. Wal-Mart is one of the companies that offer each of those characteristics in addition to a strong ethics program that it closely follows. In fact, Wal-Mart has a Statement of Ethics, which includes the practice of honesty, integrity, and compliance with the law. Compliance with the Statements of Ethics is mandatory for each employee. The company also maintains a separate Code of Ethics for the senior financial officers. Wal-Mart also has in place a Related-Party Transaction Policy that applies to Wal-Mart’s senior officers and directors. It requires material related-party transactions to be reviewed by the Audit Committee and senior officers and directors to report material related-party transactions to Wal-Mart. Moreover, an ethics office was formed to oversee and administer an ethics hotline. The ethics hot line provides a way for associates to make confidential and anonymous complaints regarding potential violations of the Statement of Ethics, including financial and accounting matters (Wal-Mart Store, Inc., 2011).
Due to the Enron sandal companies are required to reveal how they are complying with SEC regulations. “Wal-Mart’s Chief Executive Officer and Chief Financial Officer have filed their certifications as required by the Securities and Exchange Commission (SEC) regarding the quality of the company’s public disclosure for each of the periods ended during Wal-Mart’s fiscal year ended January 31, 2011, and the effectiveness of internal control over financial reporting as of January 31, 2011 and 2010. Wal-Mart’s CEO has certified to the New York Stock Exchange (NYSE) that he is not aware of any violation by the company of the NYSE corporate governance listing standards, as required by Section 303A.12(a) of the NYSE listing standards” (Wal-Mart Store, Inc., 2011).
“Wal-Mart’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (GAAP). This company’s internal control over financial reporting includes those policies and procedures that pertain to the maintenance of records and that accurately and fairly reflect the transactions and dispositions of the assets of Wal-Mart. In addition, they provide reasonable assurance that transactions are recorded to permit preparation of financial statements in accordance with generally accepted accounting principles (GAAP), and those receipts and expenditures of Wal-Mart are being made only in accordance with authorizations of management and directors of the company. Also, to provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, or disposition of the company’s assets that could have a material effect on the financial statements” (Wal-Mart Store Inc., 2011).
In order to gain a full picture of a company's financial status, the company must follow ethical reporting standards and other processes in order to comply with SEC regulations. Wal-Mart has transaction policies and an audit committee to ensure ethical behavior is practiced by senior officers. If lower level employees suspect unethical behavior, they may call an anonymous ethics hotline. Because of this, stakeholders can trust the information that is provided in relation to Wal-Mart's financial performance. The current ratio is .89, which shows that current liabilities exceed current assets (Lane, 2007). Wal-Mart has a favorable return on investment, which increased from 2010 to 2011. The debt ratio has increased from 0.73 in 2011 to 0.58 in 2010, but few would argue that Wal-Mart is in financial trouble, or consider this large company incapable of repaying short-term debt (Lane, 2007). Therefore, calculating ratios, ethical practices, and analyzing each financial document is key in determining the financial health of a company.

References

1. Wal-Mart Stores, Inc. (2011). Financial reporting: full 2011 annual report. From http://walmartstores.com/sites/AnnualReport/2011/financial_report.html.

2. Lane, M.A. (2007). Business finance online. From http://www.zenwealth.com/BusinessFinanceOnline/RA/AssetManagementRatios.html.