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Accounting
The article summarized came from www.msnbc.com and references the subject of “Business Accounting” that was covered in chapter 17 of the textbook. This story is a re-cap of “Corporate America’s” biggest scam artists and talks about the 12 largest scandals in business, referring to them as “The Dirty Dozen”. The article references a video that is being put out by CNBC and describes in detail many of the white collared criminals from as far back as the 1920s. Accounting scams in the United States have a very long history. Some of the worst scandals in the United States include companies such as: Enron, WorldCom, and Tyco. These companies have left investors and working Americans distraught at the way executives do their jobs. Governance reforms like the Sarbanes-Oxley law have helped soothe the pain a bit, but now being one year after the bill’s passage, it’s worth remembering that there were problems with accounting scandals way before Enron and the others. The 1980s, for example, had more than its share of infamous moments and headlines in the news. Most of the illegal operations of companies come to a head when either the accused is sentenced to a prison sentence or they take their own lives before the faults are found. Still, scandals are happening and may never be exposed before they affect more than just themselves.
KEY PROVISIONS OF THE SARBANES-OXLEY LAW:
Created the Public Company Accounting Oversight Board to oversee and investigate auditors, including setting auditing standards, with various disciplinary powers for rules or professional-standards violations. Unlike the previous self-regulatory body, it has a guaranteed source of funding.
Gave enhanced authority to corporate audit committees, including mandatory pre-approval of many activities. Committees may have only independent directors.
Prohibits auditors from providing various consulting and other services including lucrative financial information-systems design.
Requires rotation of key audit partners and restricts movement of auditors to the company.
Mandates certification of financial reports by top executives and prohibits improper influence on audits.