Accounting Fraud, the Investor and the Sarbanes Oxley Act...

Accounting Fraud, the Investor and the Sarbanes Oxley Act Throughout the past several years major corporate scandals have rocked the economy and hurt investor confidence. The largest bankruptcies in history have resulted from greedy executives that â€Å"cook the books† to gain the numbers they want. These scandals typically involve complex methods for misusing or misdirecting funds, overstating revenues, understating expenses, overstating the value of assets or underreporting of liabilities, sometimes with the cooperation of officials in other corporations (Medura 1-3). In response to the increasing number of scandals the US government amended the Sarbanes Oxley act of 2002 to mitigate these problems. Sarbanes Oxley has extensive†¦show more content†¦Older employees may never even get to retire because their entire pensions will disappear. Creditors and investors will also lose a great deal of money if not all of it. When this happens it affects every publicly h eld company. Investors get nervous with their money and take it out of capital markets (Tate). Without investors money companies cannot take advantage of new ideas and thus cannot expand and grow. Without growth the national economy can fall into recession, unemployment will increase, and the quality of life will decline. This is the worst case scenario but with current talk of recession it would be best to keep investors happy. Many people think that accounting fraud will not directly affect them but that is far from the truth. In the past wake of bankruptcies millions of Americans who were heavily invested through their 401(k) retirement plans in the stock market had to postpone retirement and rethink their investment strategy. According to one estimate, American workers lost $175 billion in retirement savings during this time. The losses came at a time when 401(k) plans had become very popular with employers, replacing defined benefit pension plans that guaranteed a set amount of money during an employees retirement. Any person who plans on retiring that isn’t already wealthy will have to rely on the stock marketShow MoreRelatedCorporate Scandals And The Implact Of The Sarbanes Oxley Act1472 Words   |  6 PagesA LOOK AT CORPORATE SCANDALS AND THE IMPLACT OF THE SARBANES-OXLEY ACT OF 2002 I. INTRODUCTION An economic boom filled with fraud, collapsed in the early 2000s with the unravelling of Enron in October 2001 followed by the implosion of WorldCom and many others big corporations. The downfall of these major companies led to a wide spread crisis of confidence in the financial markets. A crisis caused by executive greed was able to be magnified when the gatekeepers, the auditors, lawyers and analystsRead MoreThe Sarbanes Oxley Act Of 20021563 Words   |  7 PagesThe Sarbanes-Oxley Act of 2002 (SOX) was enacted to bring back public trust in markets. Building trust requires ethics within organizations. Through codes of ethics, organizations conduct themselves in a manner that promotes public trust. Through defining a code of ethics, organizations can follow, the market becomes fair for investors to have confidence in the integrity of the disclosures and financial reports given to them. The code of ethics includes the promotion of honest and ethical conductRead MoreThe Sarbanes-Oxl ey Act Essay1162 Words   |  5 PagesIntroduction The Sarbanes-Oxley Act, or SOX Act, was enacted on July 30, 2002. Since it was enacted that summer it has changed how the public business handle their accounting and auditing. 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