BUS 102 accounting draft

BUS 102 accounting draft - Boas 1 Will Boas Mrs. Laura...

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Boas 1 Will Boas Mrs. Laura Tholke Business 102 Section V April 14, 2011 Introduction The Sarbanes-Oxley Act was enacted July 30, 2002 to combat a series of large scale accounting frauds that took place in the early 1990s and early 2000s. The passing of the act has changed the way that companies handle financial record keeping and auditing procedures. It is named after the two main authors of the bill, Senator Paul Sarbanes and Congressman Michael Oxley. The main purpose of the act was for investors to regain confidence in the publicly held corporations they invest their hard earned wages in. This report will cover why the laws were passed, how the accounting profession has changed and adjustments educators have made in training accountants as a result of the legislation. Section Done By: Will Boas There were numerous corrupt practices in the business world in the early 2000s that led to the passage of the Sarbanes-Oxley Act. One example was the actions of Enron Inc. Enron lied about its revenues and was accused of many questionable business deals. They concealed their debt to appear that they made more profit than they actually did in order for their stock shares to be bought at a higher volume (Enron Scandal at a Glance). Many accountants employed by large scale corporations found themselves in a conflict of interest. Prior to the passage of the bill, auditing firms under contract with a company would not want to criticize a company’s accounting practices, even if they were faulty. The fear of losing out on other, more
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Boas 2 profitable business deals with the same company was too great (Sarbanes-Oxley Basics). Investment analysts also had conflicts of interest in that they would provide stock and bond information about companies to clients, while also handling mergers and acquisitions for for those same companies as well as acquiring loans. Another reason the bill was passed was to address lackluster performance among the board of directors of companies. Many directors were found to be incapable of holding such a position or took advantage of it and did not adhere to the responsibilities that it entails. This was
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BUS 102 accounting draft - Boas 1 Will Boas Mrs. Laura...

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