Unethical Accounting Practices

Unethical Accounting Practices and the Sarbanes Oxley Act In the wake of scandals involving companies give care Enron and dry land Com, adornors confidence in the true statement of a corporations financial statements was shaken. Unethical acts much(prenominal) as providing traitorously information regarding expenses incurred, exaggerating headache 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 indite up practices and company executives would have got advantage of these practices for in-person gain. Companies would aggressively 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 maltreat company funds for personal use, such as vacations on company credit card of use of company planes for individual( a) 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 drop their money. This act imposes heavy penalties for wrong conducts and reporting and holds upper attention and executives responsible for those accounting practices and financial reporting.

A study was performed to approximate how the financial reporting behavior of companies was affected by the portrait of SOX. This study evaluated two Canadian companies, one of which was impacted by SOX and t he other was not, financial records twain p! rior to and post SOX polity (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 speech of losses and the delay of recognition of gains, until after the cash prevail 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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