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Ethics Case

Essay by   •  February 5, 2013  •  Essay  •  381 Words (2 Pages)  •  772 Views

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There are more than a few different situations that might lead to unethical practices and behavior in accounting. The biggest reason has to be that accounting itself can best be describe as a mechanism used to provide financial information of a person, organization or business. The problem arises from the people in charge of the reporting as before The Sarbanes Oxley Act of 2002 there was very little to no transparency or accountability by top executives.

Investors are a huge part of the strength of a corporation so in order to stay strong many accountants would falsify information to showcase that the company was profitable when in reality it was just funneling money. Many companies in the past have participated in unethical behavior such as Enron; that concealed debt in order to keep them from appearing in the company's accounting books. Another type of unethical behavior came thanks to WorldCom which inflated revenues with bogus entries from unknown or unallocated revenue accounts. Both companies found it simple to practice unethical behavior due to the lack of regulation whether it was to hide debt or lie about money coming in both were able to get away with it. Though two different types of unethical behavior the common behavior was people lying which is what most companies faced since there was no one checking the numbers. Deregulation is the biggest situation that leads to unethical practices and behavior from a small business that deals in cash or huge corporations that require investors.

The Sarbanes Oxley Act of 2002 was put into place to add accountability to the people creating the accounting sheets. In a small perspective it is what keeps people honest. In my office due to accepting cash for policy payments and customer's having a 30 day grace period for payments a daily spot check and deposit is done. Every employee is accountable for the cash

they received or lost. By having each employee's alias on every transaction they have with the customer it enables them to double check their interaction and allows myself as the office manager to monitor trends and discrepancies. This in my opinion is what The Sarbanes Oxley Act of 2002 now does for top executives since they must individually certify that all the financial information is accurate.



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