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Application of Sarbanes Oxley Act

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Respond to the following question:

How do unethical accounting practices affect internal and external stakeholders? Cite at least one regulation to present the legal perspective.

The Sarbanes-Oxley Act contains ten titles or sections.

Summarize the major reform principles of any three titles.
Select one major corporation failure from the past ten years, and analyze how it could have been avoided if the principles of Sarbanes-Oxley would have been followed.

By April 26, 2015, in a minimum of 400 words, post a summary of your findings.

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Solution Summary

The response provides you a structured explanation of certain aspects of the Sarbanes Oxley Act . It also gives you the relevant references.

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Unethical accounting practices affect internal and external stakeholders. Unethical accounting practices mislead the employees, and shareholders. Unethical accounting practices may show the firm is earning profits even though it is making losses. The shareholders may keep the share prices high causing potential losses to investors. Similarly, employees may continue with the company and forego excellent career opportunities because they are misled by the high profits of the company.
Unethical accounting practices also affect external stakeholders. The customers, suppliers, creditors, community, trade unions, and the government can be misled by unethical accounts. They feel the company is doing well and will be able to repay its obligations. For example, the suppliers continue to give credit to the company, the customers expect the company will be able to supply its products in a timely manner, and the creditors feel that the company will be able to repay its dues. ...

Solution provided by:
Hatim Baxamusa, MBA
Education
  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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