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Ethics in Accounting

Essay by   •  July 4, 2011  •  Case Study  •  507 Words (3 Pages)  •  1,089 Views

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Ethics in Accounting

Ethics creates trust and confidence in any organization. When unethical decisions are made, it can lead to scandal that destroys companies. Ethical behavior helps people understand how to act during important business situations. Sarbanes-Oxley mandates reporting and governance responsibilities for top management (Journal of Accountancy, 2004). Every CPA firm should be concerned about managements attitude.

Concepts

In my organization, all Specified Officers should conduct themselves during company related matter, in compliance with federal, state, foreign and local regulations and laws, equal opportunity and anti-discrimination laws, and SEC rules. Each Specified Officer has to complete a Business Ethics and Conflict of Interest Questionnaire and will comply with the policy. Every Specified Officer has the continuing responsibility to disclose in writing to the company, to the attention of the General Auditor, promptly upon occurrence, any activity, transaction, interest or association which might be a conflict of interest as defined by this Policy. Disclosure is required to enable the company to determine whether any conflict exists, and if so, what action must be taken to protect the company's interest and the interests of its shareholder. No Specified Officer shall directly or indirectly, falsify record, account or document made or to be made by the company. No Specified Officer shall make any false or misleading statements. Maintenance of any cash fund or other asset for disposition by representatives of the company is prohibited without accounting for such funds and assets.

Recommendations

Companies audit efforts should be performed in compliance with organizations objectives and policies. Corporate audit is an independent appraisal activity established to review all operations. The audit group conduct reviews of all operations, functions, processes, procedures, and the system of internal controls and report findings and recommendations to management and the Board of Directors as appropriate. Good internal controls provide for the appropriate segregation of duties (Albrecht, 2007).

Whistleblowers have been given protection under SOX. Organizations should have a hotline for employees to report unethical practices or concerns. Companies should adhere to high ethical standards and accountability. Implementing a risk management plan may help the company to better understand and assess corporate risk.

Sarbanes-Oxley

When Sarbanes-Oxley Act was enacted, it caused corporations to reevaluate their position on deceptive reporting and misconduct. Sarbanes-Oxley (SOX) created in 2002, mandates reporting requirements and governance responsibilities for top management. The act implements a time table calling for shorter reporting deadlines. It requires

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