‘’Earnings management, in exchange listed companies, is not fraud but a case of caveat emptor for investors ‘’ UP708386 ‘’Earnings management, in exchange listed companies, is not fraud but a case of caveat emptor for investors ‘’ UP708386 708386 Corporate governance, Financial Crime, Ethics & Controls for Finance Pathways (U234479) 708386 Corporate governance, Financial Crime, Ethics & Controls for Finance Pathways (U234479) ‘’Earnings management, in exchange listed
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ACCOUNTING MINICASE: ACCT – 17 TEACHING NOTES BUSINESS ETHICS PROGRAM Ignore the Error? Teaching Notes What Are the Relevant Facts? 1. 2. Compo, a major client of the CPA firm, does not want to make an adjustment for the cutoff error. 4. Kelsey, the audit senior, knows a material cutoff error exists in Compo’s financial statements. 3. What Are the Ethics of the Alternatives? • Contrary to the firm’s policy, Bruce, the audit manager, has asked Kelsey not to document
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the perceived liquidity of the organization or a company. * Failing to disclose the risky investments or creative accounting practices. * Over-recording the sales revenue. * Under-recording expenses i.e. depreciation of expenses. From Enron, WorldCom and HealthSouth, it appears that accounting fraud is a major problem that is increasing in frequency and severity. research evidence has shown that a growing number of frauds have undermined the integrity of financial reports, contributed
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Sarbanes-Oxley Act of 2002 Sarbanes-Oxley Act of 2002 U.S. Senator Paul Sarbnes of Maryland and U.S. Representative Michael Oxley of Ohio followed a series of corporate failures, which inacted the SOX Act based on Enron’s bankruptcy and other key organizations such as Worldcom, Tyco, Xerox, and Adelphia who were among the United States organizations executives in the headlines for misdemeanors and multi-billion dollar reassertions," (Dembinski, Lager, Cornford, Bonvin, 2005). The Sarbanes-Oxley
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Score: 1. 60/100 Points 60 % Award: 10 out of 10.00 points Accounting is defined as the process by which financial information about a business is recorded, classified, summarized, interpreted, and communicated to owners, managers, and other interested parties. ✓ True False References True / False 2. Learning Objective: 01-01 Define accounting. Award: 0 out of 10.00 points Which of the following is NOT part of the process of accounting
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Meteoric Rise and Fall of Enron Enron was created in 1985 after a merger between Houston Natural Gas and Internorth. By 2002 it was gone forever. Its stock price rose to $90/share in August of 2000 before bottoming out at $0.40/share when they filed for bankruptcy on Dec. 2nd 2001. It only took 16 years for one of the largest Fortune 500 companies to completely dissolve, taking employee jobs, pensions, Arthur Andersen, and the American public’s faith with it. Enron and its young McKinsey consultant
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Sarbanes-Oxley Act of 2002 - SOX The finance industry was not always regulated. Prior to the great stock market crash in October of 1929, there was no regulation. After this crash, Congress held hearings to determine the problems and suggest solutions. This resulted in the Securities Act of 1933. The Security Exchange Commission (SEC) was created as a result of the Securities Act of 1933 and the Securities Exchange Act of 1934. The intent of this Commission was to restore confidence to investors
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Enron: Questionable Accounting Leads to Collapse * Problem Definition * There was a lot of oversight that happened in the company of Enron. The once supergiant energy company suddenly collapsed and it cannot be revived anymore * Performance was highly recognized and failure was gravely penalized. This lead employees to cut corners in order to achieve the desired goal * Delivery of bad news was dismissed and neglected. Only good news were entertained and this lead to employees
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The requirement to provide a DIRRI to stakeholders is not an unreasonable task for practitioners. However, the ongoing implications of the Walton case are likely to include continual heightened supervision by ASIC in regards to appointments where the referrer was involved in pre-appointment transactions requiring investigation and the increased scrutiny of DIRRI’s (even though they were held in the Walton case to be satisfactory). It has been suggested by some that pre-appointment meetings be restricted
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The talk of having a new body that was tasked with the mandate of overseeing public companies accounting and auditing process had been circulating before the enactment of the Sarbanes-Oxley act. As early as 1990s, the then chairman of the Security and Exchange Commission was already lamenting about the erosion of auditor independence. However, accounting scandals that emerged towards the end of 1990s showed the deplorable state of the corporate world that characterized the United States corporate
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