Question 1 At the time Cynthia Cooper discovered the accounting fraud‚ WorldCom did not have a whistle-blower hotline process in place. Instead‚ Cynthia took on significant risks when she stepped over Scott Sullivan’s head and notified the audit committee chairman of her findings. Discuss the key criteria for the operation of an effective corporate whistle-blower hotline. Be sure to highlight potential pitfalls that should be avoided and reference professional codes‚ legislation and academic
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form and also result in loss of business from that customer and possibly their friends and families. They will not want to continue doing business where the theft occurred and will also tell people about the crime that occurred. The Sarbanes- Oxley Act of 2002 or SOX was created by Congress to address accounting reform‚ improve corporate governance‚ and restore investor confidence signed by President George W. Bush on July 30‚ 2002. Partly due to the Enron scandal of 2001 SOX requires the
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Analysis of case 1.4 Sunbeam: The Revenue Recognition Principle 1. Company history ← In April 1996‚ Sunbeam appointed Albert Dunlap as its CEO and chairman. ← Immediately‚ the CEO began replacing nearly all of the upper management team and led the company into aggressive corporate restructuring. ← As at end of March 1997‚ the company arranged special sales contract with the wholesaler provided that the wholesaler could return all of the merchandise‚ with Sunbeam
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efficiency and effectiveness of operations and reliable reporting. True False 9. The Sarbanes-Oxley Act of 2002 has dramatically changed the daily work of financial accountants and auditors. True False 10. According to the Sarbanes-Oxley Act of 2002‚ management must identify‚ document‚ and evaluate significant internal controls. True False 11. According to the Sarbanes-Oxley Act of 2002 and PCAOB Auditing Standard No. 5‚ management must audit and report on auditors’ assertions
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current system of internal controls was explained to the accounting firm. Under SOX Sarbanes-Oxley Act of 2002‚ all public traded U.S. corporations are required to maintain a sufficient system of internal controls. In order for this to be implemented all Corporate Executives and board of directors have to ensure that the controls are reliable and effective. With LJB Company incorporating the information from SOX act this will allow them reduce corporate fraud by making sure that all of the procedures
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several years the accountants and CEOs of these corporate giants were “cooking the books‚” the act of fooling the market into believing profits are higher than they actually are. The unlucky individuals who had believed their money was invested in high earning companies were hoodwinked‚ and their money was lost forever
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As a response to that lack of financial accountability‚ the government passed the U.S. Sarbanes-Oxley Act of 2002‚ with the goal in mind to restore the confidence of investors‚ while protecting the capital markets. The government recognized the need for corporations and businesses to have strong internal controls in place‚ as an important element for rebuilding confidence and trust. Section 404 of the act stresses the need to perform an annual evaluation of internal controls and procedures for
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preventing major scandals on the lines of Enron and Worldcom. 1.0 ABSTRACT 2.0 ENRON-CORPORATE FIASCOS 3.0 HOW DID THE AUDITORS FAIL TO CATCH PROBLEMS AT ENRON? 4.0 HOW TO PREVENT RECURRENCE OF ENRON? 5.0 NEW RESPONSIBILITIES OF AUDITORS ACCORDING TO SARBANES-OXLEY ACT 2002 6.0 CONCLUSION 7.0 REFERENCES 1.0 ABSTRACT The responsibility of an auditor is to express an opinion on the financial statements based on his audit which means verification or check in accordance with International Standards on
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use for example the Enron scandal which was one of the main reasons in which the Sarbanes-Oxley Act was passed into law. The Enron scandal was when the top management began to falsify their financials in order to gain more investors so that they may reason more money. The U.S. Congress late implemented the Sarbanes-Oxley Act after the WorldCom Scandal which was another scandal like enroll. Section 404 of the Sox Act "mandates management of public companies to establish‚ document‚ and assess the effectiveness
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These are addressed with five principles of internal control: Establishment of responsibility‚ Segregation of duties‚ Documentation procedures‚ Physical controls‚ Independent internal verification‚ and Human resource controls. The 2002 Sarbanes-Oxley Act stresses importance upon guidelines of necessary internal controls for any publicly traded company or corporation. There are several practices LJB Company currently have in place‚ these will be addressed and should be continued. Finally‚
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