Explore BrainMass

Explore BrainMass

    The ethics of financial statement preparation

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    1. Management can take an over - or under - representation approach to financial statement preparation. Debate the reasons for these types of misrepresentations.

    2. While conducting your auditing duties, you discovered significant fraud. Determine how you would let management know these facts.

    © BrainMass Inc. brainmass.com October 2, 2020, 4:17 am ad1c9bdddf

    Solution Preview

    1. Misrepresentation of financial statements is not only unethical but it is also a federal crime. Companies that provide false financial statements can land their Chief Executive officer in prison for many years. Enron, Tyco, and WorldCom are good examples of companies that manipulated their financial statements in the past. Their executives are therefore serving terms behind bars. The Sarbanes-Oxley Act of 2002 was enacted to provide guidelines on financial reporting. It is required by U.S. laws that companies follow those guidelines when preparing ...

    Solution Summary

    The solution discusses the ethics of financial statement preparation.