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Government Oversight of Accounting Fraud & Abuse

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Over the years the government has become more involved in the oversight of accounting fraud and abuse. What are some of the actions that the government has enacted? Have they been successful? Why or why not?

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The main act was the Sarbanes-Oxley Act, which was created in the early 2000's as a result of the accounting scandals that took place. Enron was the main reason, followed by WorldCom. As part of the Sarbanes-Oxley Act (also called SOX), the PCAOB was created, which is the Public Company Accounting Oversight Board. In addition, we have also seen whistle blower laws, which basically protect whistle blowers from any acts of employer retaliation. In addition, the SEC now requires that certain standards are adhered to, for public companies. Public companies must have a code ...

Solution Summary

This solution discusses the actions that have been initiated by government in relation to the accounting fraud and abuse that has taken place in recent decades at major corporations.

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You are the internal accountant at a company that is preparing for an upcoming government contract bid. The management in your company is deciding if it is necessary for the company to perform a full financial status review prior to the bid. As an internal accountant, prepare a report for management that provides supporting information for a full financial status review prior to the bid. Include the following sections:

- Section I: The impact of occupational fraud and abuse on the company.
- Section II: U.S. governmental oversight of accounting fraud and abuse and its affect on the company.
- Section III: Potential corruption schemes to be aware of within the company.
- Section IV: Recommendation of types of accounting evidence and methods of gathering such evidence to support the financial status review.

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