Unethical Accounting Practices

Unethical Accounting Practices and the Sarbanes Oxley Act In the wake of scandals involving companies worry Enron and dry land Com, ornamentors confidence in the true statement of a corporations financial statements was shaken. Unethical acts such(prenominal) as providing traitorously information regarding expenses incurred, exaggerating personal credit line 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 redeem up practices and company executives would have got advantage of these practices for in-person gain. Companies would crisply 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 misemploy company funds for personal use, such as vacations on company credit card of use of company planes for nonp ublic adventures. In 2002 SOX was enacted to make accounting practices in U.S. publicly traded companies to a greater extent than accurate and help investors receive confidence in where they were expend their money. This act imposes heavy penalties for wrong conducts and reporting and holds upper counsel and executives responsible for those accounting practices and financial reporting.

A study was performed to treasure how the financial reporting behavior of companies was affected by the number of SOX. This study evaluated two Canadian companies, one of which was impacted by SOX and the other was not, financial records twain prio! r to and post SOX picture (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 book of facts of losses and the delay of recognition of gains, until after the cash run away 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: BestEssayCheap.com

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