Importance of Financial Decision-Making in the Business World
In the business world, financial decision-making is important. Some organizations have trouble with accounting and the financial decision-making process in today’s diverse organizational ethics. In this world’s current economy, the expectation for organizations is to behave in an ethical manner. The business world consists of people with different ethical belief systems, which makes it difficult to define ethics (The Journal of Accountancy, 2007). Organizations that do enforce a code of ethics can create unwanted behaviors within the organizations. These unethical behaviors can affect every individual associated with the organization. When an organization instills good ethical behaviors, its rate of success and longevity is more likely to be high.
Organizational ethics are a significant part in financial decision-making and accounting. Ethical principles set the foundation on which a cultured society exists. An exceptional illustration of ethics in accounting and finances is the Sarbanes-Oxley Act of 2002. After several financial frauds reported in 2001 and 2002, the president signed the Sarbanes-Oxley Act in July 2002. This act established major modifications to the financial practices and corporate governance regulations. According to n.d. (2006), “The given name is after Senator Paul Sarbanes and Representative Michael Oxley, who were its main architects, and it also set a number of non-negotiable deadlines for all organizations to comply” (para. 1).
The Sarbanes-Oxley Act, known as the corporate responsibility act, act gives considerable supervision responsibilities and control to the Securities and Exchange Commission (SEC) above organizations external auditors and distribution of financial statements. The SEC must employ a public company accounting oversight board (PCAOB) with the authority to control the public accounting (Albrecht, Stice, Stice, & Swain, 2005, p. 201). This law was put in place because of the involvement of Enron and Tyco
Organizational ethics are a significant part in financial decision-making and accounting. Ethical principles set the foundation on which a cultured society exists. An exceptional illustration of ethics in accounting and finances is the Sarbanes-Oxley Act of 2002. After several financial frauds reported in 2001 and 2002, the president signed the Sarbanes-Oxley Act in July 2002. This act established major modifications to the financial practices and corporate governance regulations. According to n.d. (2006), “The given name is after Senator Paul Sarbanes and Representative Michael Oxley, who were its main architects, and it also set a number of non-negotiable deadlines for all organizations to comply” (para. 1).
The Sarbanes-Oxley Act, known as the corporate responsibility act, act gives considerable supervision responsibilities and control to the Securities and Exchange Commission (SEC) above organizations external auditors and distribution of financial statements. The SEC must employ a public company accounting oversight board (PCAOB) with the authority to control the public accounting (Albrecht, Stice, Stice, & Swain, 2005, p. 201). This law was put in place because of the involvement of Enron and Tyco
References: Albrecht, Stice, Stice, & Swain, (2005). Accounting: Concepts and Applications (9th Ed.). Quebecor World, Versailles, KY: South-Western, Thomson. Lebovits, N. (2006, August, 2006). Beyond Sarbanes-Oxley: Three best practices to adopt in your organization. Retrieved March, 2011, from http://www.aicpa.org/pubs/jofa/aug2006/lebovits.htm N.D. (2006). The Sarbanes-Oxley Act. Retrieved from http://www.soxlae.com The Journal of Accountancy (2007). Retrieved March, 2011, from http://www.aicpa.org/pubs/jofa/joahome.htm