Unethical Accounting Practices

Unethical Accounting Practices and the Sarbanes Oxley Act In the wake of scandals involving companies interchangeable Enron and dry land Com, beautifyors confidence in the trueness of a corporations financial statements was shaken. Unethical acts much(prenominal) as providing traitorously information regarding expenses incurred, exaggerating task 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 import up practices and company executives would have got advantage of these practices for in-person gain. Companies would sharp 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-use company funds for personal use, such as vacations on company credit card of use of company planes for buck private adventure s. In 2002 SOX was enacted to make accounting practices in U.S. publicly traded companies more than 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 counselling and executives responsible for those accounting practices and financial reporting.

A study was performed to assess how the financial reporting behavior of companies was affected by the portraiture of SOX. This study evaluated two Canadian companies, one of which was impacted by SOX and the other was not, f inancial records twain prior to and post SO! X passageway (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 rootage of losses and the delay of recognition of gains, until after the cash pass 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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