Unethical Accounting Practices

Unethical Accounting Practices and the Sarbanes Oxley Act In the wake of scandals involving companies the like Enron and dry land Com, locateors confidence in the true statement of a corporations fiscal statements was shaken. Unethical acts such as providing traitorously information regarding expenses incurred, exaggerating demarcation 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 hold open up practices and company executives would have got advantage of these practices for in-person gain. Companies would precipitously 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 abuse company funds for personal use, such as vacations on company credit card of use of company planes for toffee-nosed adventure s. In 2002 SOX was enacted to make accounting practices in U.S. publicly traded companies more(prenominal) than accurate and help investors receive confidence in where they were invest their money. This act imposes heavy penalties for wrong conducts and reporting and holds upper perplexity 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 passing of SOX. This study evaluated two Canadian companies, one of which was impacted by SOX and the other was not, financial records twain prior to and post SOX legislation (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 file name extension of losses and the delay of recognition of gains, until after the cash carry 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

If you want to get a full essay, visit our page: cheap essay