Unethical Accounting Practices

Unethical Accounting Practices and the Sarbanes Oxley Act In the wake of scandals involving companies standardised Enron and dry land Com, spendors confidence in the accuracy of a corporations fiscal statements was shaken. Unethical acts such as providing traitorously information regarding expenses incurred, exaggerating commercial enterprise revenue, or misusing business funds argon all reasons the Sarbanes Oxley Act (SOX) was implemented in 2002. Prior to SOX companies were not necessarily accountable for questionable keep open up practices and company executives would have got advantage of these practices for in-person gain. Companies would acutely estimate expenses occurred or exaggerate revenue to entice investors to invest money or creditors to free-spoken lines of credit. In some cases executives would ill-usage company funds for personal use, such as vacations on company credit card of use of company planes for close adventures. In 2002 SOX was enacted to make accounting practices in U.S. publicly traded companies more than accurate and help investors receive confidence in where they were investing their money. This act imposes heavy penalties for wrong conducts and reporting and holds upper oversight and executives responsible for those accounting practices and financial reporting.

A study was performed to label how the financial reporting behavior of companies was affected by the passing of SOX. This study evaluated two Canadian companies, one of which was impacted by SOX and the other was not, financial re cords twain prior to and post SOX portrayi! ng (Lobo & Jian 2010). The study revealed that these companies were generally more conservative in their financial reporting. An example of this conservatism is a more timely point of reference of losses and the delay of recognition of gains, until after the cash time period is recognized. Additionally, the study revealed that the use of non-generally reliable accounting principles decreased dramatically and more...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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