Question

• What role does honesty play in the preparation and presentation of financial statements?
• What are some of the consequences of dishonesty in the preparation and presentation of financial statements?
• Why did Congress enact the Sarbanes-Oxley Act in 2002?
  • Requirements: The paper should be at least 500 words, APA formatted, and provide direct references to the assigned readings.

Answer 1

Honesty play vital roles in accounting because they allow investors to trust the information they receive about companies in which they invest. Honesty in accounting is the primary characteristic of the profession that allows financial decision -makers to make appropriate judgments.

Dishonesty the preparation and presentation of financial statements is just vise versa.

For example are as follows..

• Uninformed decisions.
• Dead stock.
• Damaged company credibility.
• Missing red flags.
• Low cash flow.
• If profit is reported too low – the business could be seen as undervalued.
• If profit is reported too high – the business can cause a higher tax liability.

The Sarbanes-Oxley Act of 2002 was passed by Congress in response to widespread corporate fraud and failures. ... To deter fraud and misappropriation of corporate assets, the Actimposes harsher penalties for violators.

The primary goal of the Sarbanes-Oxley Act was to fix auditing of U.S. public companies, consistent with its full, official name: the Public Company Accounting Reform and Investor Protection Act of 2002.

The Sarbanes-Oxley Act of 2002 cracks down on corporate fraud. It created the Public Company Accounting Oversight Board to oversee the accounting industry. It banned company loans to executives and gave job protection to whistleblowers.