The Accounting And Auditing Industry - 916 Words

Before SOX was established, the public trusted and depend the auditors wholly for the publicly-traded companies to accurately complete audits of the companies’ financial statements which they relied upon in making investment decisions. The accounting and auditing industry was self-regulated (Cunningham Harris, 2006). Company managers had little accountability when accounting and auditing problems arose. Everything was changed after there were many high-profile cases of accounting fraud, particularly the scandals of Enron and WorldCom in the early 2000s. Each of these frauds caused massive losses to investors of the companies and the public lost confidence in securities of US market. Following these series of failures, SOX was enacted to restore investor’s confidence which was rattled and to prevent accounting frauds in the future with improved corporate governance and accountability which all public companies must comply. SOX was named after Senator Paul Sarbanes and R epresentative Michael G. Oxley, who were the main drafters of the Act. It was approved by the House of Representatives and signed into law by the President George W. Bush on July 30, 2003. Lack of ethics and integrity seem to be the key factors that caused accounting fraud. SOX revised the framework for the public accounting and auditing profession, provides guidance for better corporate governance and create regulations to define how public companies are to comply with the law. Although many have questionedShow MoreRelatedImportance of External Auditors1110 Words   |  5 Pagesobjective opinion on the organization’s financial statement and effectiveness of the accounting polices in order to help management to make decisions. If the independence of the external auditors is impaired, the public will doubt the quality of professional auditing services, and the consequence would be very serious, just like the bankruptcy of Enron led to the disorganization of Arthur Andersen, o nce a giant accounting company in the world. In order to maintain and increase the independence of externalRead MoreAssignment of Auditing1402 Words   |  6 PagesA professional judgment is a key factor in auditing. As a result of development of auditing and accounting industry, especially after a series of accounting fraud and auditing failure cases, such as Enron and Arthur Andersen, in the last decade, professional judgments is becoming a more and more important aspect for the independent auditing industry. Recently, many countries and professional bad issued more strict auditing standards to emphasize to this point. It means the auditor should be requiredRead MoreThe New Accounting Staff Audit Practice Alert No Essay903 Words   |  4 Pagesdirections and conclusions (CRYSTAL) The effective date of the new accounting Staff Audit Practice Alert No. 12 standard for public companies reporting under U.S. generally accepted accounting principles (U.S. GAAP) is annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The effective date of the new accounting standard for companies reporting under International Financial Reporting Standards (IFRS) isRead MoreAuditors in the Business World1642 Words   |  7 PagesAccounting is the process of identifying, recording, and communicating the economic events of an organization to interested users to make sound decisions. In accounting identifying economic events involves selecting the economic activities related to a particular organization such as paying out salaries to employees of a particular entity. In turn, once these economic activities have been identified they are recorded in the books daily into a systematic system measured in dollars. These econo micRead MoreEnron s Financial Fraud And Corporate Fraud1700 Words   |  7 Pagespurpose of corporate fraud and reason are different, which Enron’s financial fraud is typical event and influence accounting filed lots. Because Enron is the beginning of the series of financial frauds in American, and secondly is form growth to the bankruptcy of Enron, has attracted American media and public, the third reason is Enron’s event also lead to the world top five accounting firm Arthur Anderson collapses. Enron was one of the world biggest electricity and Gas Company, before it announcedRead MoreEssay on Analysis of the Enron/Arthur Anderson Scandal1558 Words   |  7 PagesAnderson were both giants in their own industry. Enron, a Texas based company in the energy trading business, was expanding rapidly in both domestic and global markets. Arthur Anderson, LLC. (Anderson), based out of Chicago, was well established as one of the big five accounting firms. But the means by which they achieved this status became questionable and eventually contributed to their demise. Enron used what if often referred to as â€Å"creative† accounting methods, this resulted in them postingRead MoreSharias Case621 Words   |  3 Pagesstatements auditing concepts and procedures that could be applied in determining whether an Islamic bank has been Shari’a compliant during a given financial reporting period? * Cultural differences across countries and regions of the world have complicated efforts to develop a common set of international accounting and auditing standards. * Islam accepts the fact that accounting is a social construction and itself constructs social reality but this reality which the accounting constructsRead MoreCase 4.4 Waste Management1069 Words   |  5 Pagesfraud at Waste Management. Waste Management was under pressure from other companies within the industry that could offer the same services at lower prices to customers. Dean L. Buntrock, founder, chairman, and CEO of Waste Management was the driving force behind the fraud. Buntrock set the earnings targets, fostered a culture of fraudulent accounting, and personally directed certain of the accounting changes to make the targeted earnings. Buntrock presented himself as a pillar of the community,Read MoreAuditing And The Growing Use Of Financial Software1114 Words   |  5 PagesAUDITING AND THE GROWING USE OF FINANCIAL SOFTWARE Terms of reference The report is a part of an assessment for the auditing unit; the intended audience is the lecturer Mr Ade Otukoya. The report is written after a presentation done in class to reflect on your understanding and how to improve after getting your feedback. Table of contents †¢ Introduction (what is auditing) †¢ Auditing definitions †¢ Purpose of auditing †¢ An overview of framework for audit assignment †¢ Auditing terms and definitionsRead MoreCorporate Accounting Firms Became A Tremendous Profit Generator1045 Words   |  5 PagesFrom the 1960s to 1970s, large public accounting firms expanded to become consulting services rather than traditional audit and tax services. The consulting field grew so rapidly that it became a tremendous profit generator. New hires in these consulting services usually did not have backgrounds or degrees in accounting. Firms were not requiring new hires to take six weeks of intensive accounting courses and being a CPA was no longer a preference, which was very different than it used to be. The