Lesson 2

Lesson 2 - Name: Jay Patadia Enrollment Number: 688430...

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Name: Jay Patadia Enrollment Number: 688430 Course Number: ACCT 3222Z Lesson 2 2-1. briefly discusses the key events that led up to the Sarbanes- Oxley Act of 2002 and the creation of the PCAOB. - During the economic boom of the 1990s and early 2000s, accounting firms were selling high margin non audit services to their audit clients. Independence standards in force at the time allowed auditors to perform many such services, including information system design and implementation and internal audit services, even for public company audit clients. In October 2001, Enron, one of the largest public companies in the United States at the time, became the subject of an SEC investigation into its accounting practices. The investigation quickly uncovered massive financial deception that had been going for several years. The company released an earnings restatement for previous years, disclosing billions of dollars in overstated earnings and previously undisclosed debt obligation. Arthur Andersen, the public accounting firm that audited Enron’s financial statements, immediately became embroiled in the controversy, because the firm had failed to report the vast extent of Enron’s improper accounting. Shortly after the Enron Scandal, numerous other scandals involving corporate giants, brokerage firms, stock exchanges, mutual fund managers, and several of the large public accounting firms were
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Lesson 2 - Name: Jay Patadia Enrollment Number: 688430...

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