2000’s for their misleading accounting methods‚ leading investors to believe the company was making billions; in which the government step-in‚ and created the Sarbanes-Oxley Act (SOX) of 2002. In early 2000’s‚ numerous Fortune 500 companies‚ Enron‚ WorldCom‚ Arthur Anderson and Adelphia and others‚ were alleged practicing complex accounting methods to cover their huge debt‚ while claiming they were making billions of dollars (Ferrell‚ O. C.‚ Hirt‚ G. A.‚ & Ferrell‚ L. 2005). However‚ the accounting
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Sarbanes-Oxley Act Brandie Cortinas ENGL 145(D-21) 5-12-14 Ms. Vivian Abstract The act enacted in response to financial problems to protect the public from accounting errors and fraud. The act does not specify how a business should store their records; rather‚ it defines which records are to be stored and for how long they’re going to be stored. The act affects the financial corporations and the IT department. All business records must be saved for more than five
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the financial system. The July 2002 enactment of the Sarbanes Oxley Act‚ co-authored by U.S. Sen. Paul Sarbanes of Maryland and U.S. Rep. Michael Oxley of Ohio‚ followed a series of large public company failures that included Enron‚ Tyco and WorldCom. Sarbanes-Oxley addressed investor confidence and fraud through reform of the public company reporting standards. However‚ much damage in the market occurred with the collapse of several major companies between 2002 and 2004. (smallbusiness.chron
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overvalued at the point of acquisition and take a huge written-off afterwards and thus companies can reduce the systematic drag on earnings by adopting different depreciation and amortization methods. In precedent high-profile scandals‚ such as Enron‚ WorldCom and Cisco‚ great losses were suffered by the investor‚ employees and the whole society‚ which draw great attention of the regulatory authorities and the public to avoid such tragedy to happen again. To increase the earning quality in acquisition
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conspiracy. There could be employees that are in synergy (finance and or accounting departments) can alter the financial material that neither would be captured by an internal control. This is something that took place in companies like Enron and MCI WorldCom. With all the internal controls set in place‚ there can still be errors like human errors. Controls are set in place so the company is protected. This would include things like from theft‚ fraud and other things that could damage a company and
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Company would have to engage in accounting practices for which there was no legitimate justification‚ and Ebbers replied to Sullivan‚ in words or in substance‚ “We have to hit our numbers.” Scott Sullivan’s position of Chief Financial Officer at WorldCom‚ in conjunction with weak controls‚ presented opportunities for him to commit fraudulent activities. Sullivan’s high position allowed him to dictate his power over his subordinates and often directed them to make large entries to the general ledgers
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Internal Audit and the Relationship with Senior Management Summary: The case study “Internal Audit Reporting Relationships: Serving Two Masters” was a part of a series of research projects being developed by the Institute of Internal Auditors to determine the various relationships‚ specifically reporting relationships between the internal auditor and those charged with governance. To obtain research about the various types of reporting relationships‚ independence‚ conflicts that arise from
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Article Review The Sarbanes-Oxley Act of 2002 ARTICLE SYNOPSIS In response to the Enron and WorldCom scandals‚ the Sarbanes-Oxley Act was enacted in July 30‚ 2002. This provides a comprehensive power that modifies the compliance of how companies would need to report their financials to the Securities and Exchange Commission (SEC). The law’s purpose is to solve precise mechanism failures in accounting approaches and requires greater levels of fiduciary responsibilities especially for those
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References: CNET (2002) Drawing lessons from WorldCom [WWW] CNET. Available from: http://news.cnet.com/Drawing-lessons-from-WorldCom/2009-1022_3-943517.html [Accessed 30/11/2010] BBC (2002) Enron scandal at-a-glance [WWW] CNET. Available from: http://news.bbc.co.uk/1/hi/business/1780075.stm [Accessed 02/12/2010] SOXLAW (2002) The Sarbanes-Oxley
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legitimate power‚ reward power‚ coercive power‚ expert power‚ referent power. Case Study Bernie Ebbers built WorldCom Inc into one of the largest telecommunication firms. Yet he and CFO Scott Sullivan have become better known for creating a massive corporate accouting fraud that led to the largest bankruptcy in US history. Two investigative reports and subsequent court cases concluded that WorldCom executoves were responsible for billions in fraudulent or unsupported accouting entries. How did this mammoth
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