Effects of Unethical
Effects of Unethical
Ben Carr
ACC291
February 28, 2013
Tamela Velaquez
Effects of Unethical
“What distinguishes the majority of men from the few is their inability to act according to their beliefs.”-John Stuart Mill. Greed is the motivation behind every major scandal in corporate America. Living a lavish lifestyle also plays a key role when an individual decides to lie, cheat, and steal in order to take what others have earned. The Tyco International scandal is a great example of which unethical accounting was practiced. Former Tyco CEO Dennis Kozlowski was given a nineteen million dollar interest free loan and Tyco paid the income tax on the loan. This ultimately lead to his downfall. Overall, Kozlowski used over $75 million of Tyco funds. None of these expenditures was publicly revealed to the company’s shareholders. Just before Kozlowski resigned he spent another one million of New York state sales taxes on art purchases. Because the Sarbanes-Oxley Act is in place, top management must now individually certify the accuracy of financial information. In addition, penalties for fraudulent financial activity are much more severe. Also, Sarbanes-Oxley act increased the independence of the outside auditors who review the accuracy of corporate financial statements, and increased the oversight role of boards of directors. If Sarbanes-Oxley had been in place Tyco would still be one of the leading producers of medical devices in the United States.
Greed will cause an individual to gamble with shareholders money but it cannot gamble with the Sarbanes-Oxley act. Unethical accounting was and is amongst a number of large and small companies throughout America. Because of the Sarbanes-Oxley Act, the era of low standards and false profits are over.
References
Kimmel, P.D., Weygandt, J.J., & Kieso, D.E. (2010). Financial accounting: Tools for business decision making (5th ed). Hoboken, NJ: John Wiley &
Ben Carr
ACC291
February 28, 2013
Tamela Velaquez
Effects of Unethical
“What distinguishes the majority of men from the few is their inability to act according to their beliefs.”-John Stuart Mill. Greed is the motivation behind every major scandal in corporate America. Living a lavish lifestyle also plays a key role when an individual decides to lie, cheat, and steal in order to take what others have earned. The Tyco International scandal is a great example of which unethical accounting was practiced. Former Tyco CEO Dennis Kozlowski was given a nineteen million dollar interest free loan and Tyco paid the income tax on the loan. This ultimately lead to his downfall. Overall, Kozlowski used over $75 million of Tyco funds. None of these expenditures was publicly revealed to the company’s shareholders. Just before Kozlowski resigned he spent another one million of New York state sales taxes on art purchases. Because the Sarbanes-Oxley Act is in place, top management must now individually certify the accuracy of financial information. In addition, penalties for fraudulent financial activity are much more severe. Also, Sarbanes-Oxley act increased the independence of the outside auditors who review the accuracy of corporate financial statements, and increased the oversight role of boards of directors. If Sarbanes-Oxley had been in place Tyco would still be one of the leading producers of medical devices in the United States.
Greed will cause an individual to gamble with shareholders money but it cannot gamble with the Sarbanes-Oxley act. Unethical accounting was and is amongst a number of large and small companies throughout America. Because of the Sarbanes-Oxley Act, the era of low standards and false profits are over.
References
Kimmel, P.D., Weygandt, J.J., & Kieso, D.E. (2010). Financial accounting: Tools for business decision making (5th ed). Hoboken, NJ: John Wiley &
References: Kimmel, P.D., Weygandt, J.J., & Kieso, D.E. (2010). Financial accounting: Tools for business decision making (5th ed). Hoboken, NJ: John Wiley & Sons.