Integrity in Accounting

Unit 9 Final Project: Integrity in Accounting “In 2001 and 2002 corporate giants like Enron, Global Crossing, and WorldCom were forced to declare bankruptcy, and massive accounting and other irregularities were revealed… In response to the public outcry that ensued, the [Sarbanes-Oxley] Act was enacted” (Lander, 2004, p. 1). Officials feared that because of these scandals in the financial reporting industry that investor confidence would be lost, which would cause the economy to deteriorate. The purpose of the Sarbanes-Oxley Act is to reduce the probability of additional corporate scandal by eliminating dishonest corporate conduct. (Weygandt, Kimmel, & Kieso, 2009). The intended goals of The Sarbanes-Oxley Act are to improve the separation of duties of auditors, ensure accuracy of the auditing profession by instituting ethical principles to follow, and to enhance the system of governing corporate accounting (Willits & Nicholls, 2014). The accounting profession’s credibility has suffered from the actions of those involved in the Enron and WorldCom scandals. To overcome the effects of these past scandals the accountant’s personal integrity will play a huge role. Integrity is an important quality for the accounting professional to possess when preparing financial documents, making financial decisions, and handling confidential client information. When preparing financial documents, an important quality for the accounting professional to possess is integrity. When the accountant behaves with integrity, it will instill trust and confidence in his profession. The accountant must follow the generally accepted accounting principles (GAAP) that have been set by the accounting profession. These guidelines are a broad set of rules, and there is room for interpretation. When interpreting these guidelines, the accountant should rely on personal integrity. Section 406 of The Sarbanes-Oxley Act requires a corporation’s code of ethics to support “full, fair,

References: Carter, S. (1996, March). Becoming people of integrity. Christian Century, 113(9), 296. (Kaplan Library) Lander, G. (2004). What Is Sarbanes-Oxley? [Electronic version by McGraw Hill]. doi: 10.0136/0071442340 (Kaplan Library) Smith, L. (2003, March). A fresh look at accounting ethics. Accounting Horizons, 17(1), 47-49. doi: 10.2308/acch.2003.17.1.47 Weygandt, J., Kimmel, P. & Kieso, D. (2009). Accounting Principles (9th ed.). DeKalb, IL: John Wiley & Sons, Inc. Willits, S. & Nicholls, C. (2014, April 1). Is the Sarbanes-Oxley Act Working? CPA Journal, 84(4), 38-43. (Kaplan Library)