Question

please type out the asnwer to this

The Accounting profession has, in the recent past, suffered due to the ethical lapses of a few individuals. Describe one of the actions that has been taken to attempt to restore the trust that the public once had in the accounting profession. (Describe using at least 5 sentences). Do you believe this action will help? Explain your answer. (Explain using at least 5 sentences.)

Answer 1

Answer :

In recent past , the following are the reason on the ground of ethical lapses for suffering of accounting profession, we need to know first as

a) Greed - An individual attempt accounting fraud when he is greedy and wants more money.

b) Opportunity- A normal individual does not attempt such abnormal practices in accounting field untill the strict law is applied, however whenever there is loopholes, he may indulge in such abnormal practices, which may be in nature of corporate fraud.

c) Disconnection- A person can become wrapped up within the corporate culture of that company and lose sight of how the rest of the world is functioning. So daily surroundings of corporate culture determines the transparency. if there is weak form of such surroundings , a person may involve in accounting fraud.

d) ignorance- Ignorance is no excuse for committing unethical or illegal actions, it may play a role in accounting crimes.

such as a person might be calling that the fraud is subject to his ignorance of the law or subject due to lack of knowledge, but in actual its not true.

Action taken - After the enron and worldcom scam, the public lost confidence in the accounting profession. it was the difficult time for all of accounting bodies , which were involved in financial reporting process. one action that has been taken such as

a) Sarbanes-Oxley (SOX) bill was passed, according to the new bill the auditor can't perform internal as well as external audit at the same time for one client. It suggested for creation of an oversight board , that is PCAOB, which is under the SEC jurisdiction. The PCAOB has the authority over audit firms auditing any SEC clients in the SEC jurisdiction.The listing requirement is reformed to help strengthen board of director governance over senior management. The disclosure requirement related to financial statement is reformed so as to maintain and enhance the quality of the information provided to creditors, investors, and other users of the financial information included in the financial statements.

Comment - It can be said to be correct in my point of view that it will bring transparency and improved mechanism of financial statement reporting ,as the reforms involves restriction on auditor for internal audit and external audit at the same time, so the auditor can't take advantage of his designation. It framed enhanced disclosure requirement which are improving transparency in financial disclosure.

.