Sarbanes-Oxley Act (2002) Developed by U.S senator Paul Sarbanes and U.S representative Michael Oxley and enacted in 2002, the Sarbanes Oxley Act sought to delimit the increasing level of financial fraud. The sought enhance the accounting process by ensuring that the top management remained actively involved on an individual basis in the analysis and certification of the accuracy levels pertaining to company financial information. The Act was developed in an effort to reduce and consequently eliminate fraudulent financial activity incorporated by the accounting element in firms. The Act set up dire penalties pertaining to fraudulent financial activity, which was necessary following the Tyco International and WorldCom that led to the loss of billions in investor money as the financial scandals led to the depreciation of the share prices leading to consequent sock loss in …show more content…
The participants include the board of directors, managers, shareholders, creditors, auditors and stakeholders (Ramadhan, 2012). It further identifies the rules and procedures incorporated in decision making within corporate issues. Incorporation of corporate governance enhances the development of a structure that seeks to enhance proper achievement of organizational objectives through identification and incorporation of social, legislative, market and environmental aspects that directly affect the corporate functions of the organization. The adoption of the Act sought to ensure that businesses adopted high operational standards necessary in influencing the adoption of effective financial procedures that meet the stakeholder interests. Therefore, the adoption of the Sarbanes-Oxley Act within U.S. firms remained instrumental in ensuring that the firm meets the financial obligations of stakeholders through the adoption of the corporate governance
ABC offers separately priced extended warranties for appliances sold that are non-refundable and have no limits to the potential cost of honoring the warranty. Although ABC does track warranty profits and losses by appliance type, assume that no analysis has been performed to determine the rates at which cost are incurred throughout the warranty period. Assuming that manufacturer warranties provide coverage for the appliance for 1 year from the date of purchase, when should revenues and expenses of such warranties be recognized? FASB Accounting Standards Codification (ASC) topic 605-20-25-3 (Revenue Recognition) states that in regard to extended warranties “revenue shall be recognized in income over the period in which the seller is obligated
The Regulatory Compromise (Chapter three) starts off with discussing the influence that philanthropy had on politics around the time of the World Wars and depression of the early 20th century. One of the problems that existed at the time was the urge to influence laws with the power of philanthropy. An example of this is the court ruling against the validity of a gift for women’s rights because it was aimed to “directly and exclusively change the laws”. During this time, being philanthropic in order to gain political power, or change laws, was not accepted. There were certain rules against whether or not a charitable gift was even considered “charitable” depending on the purpose it was meant to serve.
The financial scandals in early 2000s caused the Sarbanes-Oxley Act of 2002 to be created. Enron, WorldCom and the accounting firm, Arthur Andersen, to intentionally mislead their shareholders by exaggerating their profits and understating their expenses. The scandals had raised the importance of internal control for enhancing corporate governance. Therefore, the government established the SOX to protect the interest of the investors and employees and to monitor the companies and auditors.
As a resident of California, I can attest that California needs to pass House Bill AB 1321, better known as the Nutrition Incentive Matching Grant Program. Bill 1321 will improve the overall public health in the state of California. This bill would allow low-income residents of California to access and affordable and nutritious fresh produce. Outlined in Bill 1321 is a healthy food incentive program that serves California’s low-income populations who receive Supplemental Food Assistance Program (SNAP) benefits. Bill 1321 strives to secure access to affordable and healthy food options for California’s most vulnerable populations.
The Dodd-Frank Act is a federal law that places regulation of the financial industry in the government. It grew out of the Great Recession with the purpose of avoiding another collapse of a major financial institution. It is intended to safeguard consumer’s procedures to prevent borrowers from being taken advantage of by banks and financial institutions using misleading or deceptive activities or procedures when lending money for mortgages or other purposes. Personally, I think this law is a failure. The act presented that it would terminate the “Too-big-to-fail” and help financial stability.
Chapter 13 Section 1 Outline Constitutional Rights Citizens and noncitizens alike have the rights to speak freely, to read and write what they choose. Constitution guarantees the rights of U.S. citizens The whole society suffers if the people do not carry out their responsibilities as citizens Constitutional Rights Guarantees certain basic rights in the Bill of Rights, comprised of the first 10 amendments.
In a 2004 interview, Senator Paul Sarbanes stated: “The Senate Banking Committee undertook a series of hearings on the problems in the markets that had led to a loss of hundreds and hundreds of billions, indeed trillions of dollars in market value. The hearings set out to lay the foundation for legislation. We scheduled 10 hearings over a six-week period, during which we brought in some of the best people in the country to testify... The hearings produced remarkable consensus on the nature of the problems: inadequate oversight of accountants, lack of auditor independence, weak corporate governance procedures, stock analysts ' conflict of interests, inadequate disclosure provisions, and grossly inadequate funding of the Securities and Exchange
Code. It is now a criminal offense to retaliate against whistle-blowers, carrying penalties from a large fine to 10 years in prison” (Kleckner, Phil and Jackson, Craig 2004). Accordingly, the Sarbanes-Oxley Act helped Robert Fulk on many levels as it was he who exposed the falsehood of business practices of UPS and their cheating the US government—one of their biggest customers. Even though Fulk found himself in a compromising position with UPS, by exposing the mask and the deep connotations of deception that was underneath the UPS corporate body, he still came out winning a victory for himself and morally and ethically individuals who believe in being fair and upstanding
Target Corporation (TGT) is an international general merchandise and grocery retailer founded in Minneapolis, Minnesota that works to ensure that the customer is provided with the opportunity to purchase a wide variety of goods such as household products, electronics, pharmacy, personal care products, grocery goods, clothing apparel, and sporting goods in order to achieve customer satisfaction at a discounted price in order to remain competitive within the industry. The primary goal for Target is to overcome their various competitors within the industry in order to generate profit through continuous innovation and delivering outstanding value at each Target location in order to be the preferred shopping destination amongst the customer. In
Pre FASB: In 1959 AICPA formed the Accounting Principles Board to help standardize accounting principles. APB’s Opinion No. 8 “Accounting for the Cost of Pension Plans” (1966) was the first attempt to make pension rules more objective and bring them to accrual basis. Companies, however, still failed to fully disclose their pension obligations. Formed in 1972, FASB did not address the issue until 1980 and APB’s
According to the Appendix A of AASB10 non-controlling interest (NCI) is defined as: “Equity in a subsidiary not attributable, directly or indirectly, to a parent” (Ecompress.com.ezproxy.lib.uts.edu.au, 2016). A non-controlling interest is also known as a minority interest and is part of the equity of the consolidated group. For example, 80 percent of a subsidiary’s ownership (equity) interests are held by the subsidiary’s parent, and 20 percent of a subsidiary’s ownership interests are held by other owners; this ownership interest is known as a non-controlling interest. In the consolidated statement of financial position, the non-controlling interest is stated within the equity, the amount is evidently identified and categorized.
“Chasing Madoff”, a documentary released in 2010 portrays the way the whistleblower, Harry Markopolos, uncovered Bernie Madoff’s fraud scheme and his ten-year struggle to get the SEC to investigate. The documentary begins with an introduction to Harry Markopolos and his former coworkers Frank Casey and Neil Chelo. The three men work in finance, with investment portfolios. They were aware that in the finance industry there was much talk about an investment company making their customers high returns. Casey came across some investment information from a client of Madoff and gives the information to Markopolos to look over.
After the crises ended, the Dodd-Frank-Act evolved from the 2008 crisis to help reform financial regulations and to try prevent a crisis like the one in 2008 from happening again.(Amadeo, 2017). The Dodd-Frank Act is a law that was passed right after the Great Recession in 2008. The law is basically not letting banks like what do to the consumer and lie to people about the mortgage loans they take out and prevent the economy to crash in such a short period of time like it did in 2008. The Dodd-Frank Act is specifically geared towards the bigger banks in the United States, but also many hedge funds. It outlines rules and specifics that these big banks like Morgan Stanley have to follow, it also does not let these big banks to have the ability to own, and invest in hedge funds or private equity funds.
Conclusion After reviewing the information obtained through this report, it highlights the lack of regulation and their accounting practices which took place within Lehman Brothers. The accounting practices that were used within the bank were set by the tone at the top and show that the CFO’s during the 2000’s and going forward had plenty of knowledge of the Repo 105 transactions and had no great will to do anything about. The thinking at the time seemed to be, that the company had used this accounting practice for so long, that if there was something wrong it would have come up by now no point rocking the boat.
A system to check and balances the benefit of all the board of directors and to avoid some of top management from making decisions that only benefit themselves is created and named corporate governance. Corporate governance means the system of rules, practices and processes by which a company is directed and controlled. The set of rules provided as a guidelines for the board of directors to make sure that accountability and fairness in a company’s relationship with its stakeholders such as financiers, customers, management, employees, shareholders and also society in order to achieve company’s goals and targets in a manner that add a value to the company. All of the stakeholders play an important role in corporate governance to ensure that