Ethics and Judgement Research Paper

...

There was an extensive damage to the economy and society, owing to these sensational corporate scandals that had taken place. Such occurrences of fraud posed a question of morality to the profession of accountancy itself. Due to the names of many reputed firms being trialled in fraud, the public as well as government realised, there needed to be legislations to govern corporate accountability and ethics reform. Hence to control corrupt corporate behaviour, was introduced, the Sarbanes Oxley Act.

Sarbanes Oxley Act

Also called as SOX, this was one of the most significant legislation that was applied to the accounting and auditing field. It was enacted in 2002 with the major component being the creation of the Public Company Accounting Oversight Board (PCAOB). The body since its existence, has been proactive in registering & inspecting accounting firms, establishing auditing ethics, independence. It hence plays a crucial role in protecting investors and the general public by promoting accurate and independent audit reports. (King & Case, 2014). As per IMA (Institute of Management Accountants), “SOX created a total revision of the regulatory framework for the public accounting and auditing profession and provided guidance for strengthened corporate governance. It was considered to be the most far-reaching legislation affecting public corporations and their independent auditors since the 1930s.” (Verschoor, 2012).

However even such a famed legislation cannot be said to have been effective in laying down the ethics in practice for accountants and influence their professional judgements. This is because, ethics and judgement are based on principles and not on mechanical rules. Rules may be proposed as a guide to observe the principles, however the implementation in practise requires professionalism and ethics in oneself.

---------------------------------------------------------------

References list:

Block, S., Hirt, G. and Danielson, B. 2011, Foundations of Financial Management, 14th ed, McGraw-Hill Irwin, New York.

DeGrace, T 2011, The Dot Com Bubble Bust That Caused the 2000 Stock Market Crash, StockPickSystem, weblog post, 11 April, viewed on 9 September 2015, http://www.stockpickssystem.com/2000-stock-market-crash/>.

Garner, Don E., McKee, David L., and McKee, Yosra A., 2007, Accounting and the Global Economy after Sarbanes-Oxley, M.E. Sharpe, Inc., Armonk, NY, USA.

King L., D., Case J., C, 2014, ‘Sarbanes-Oxley Act And The Public Company Accounting Oversight Board’s First Eleven Years’, Journal of Business and Accounting, Vol.7, No.1, p. 11.

Vershoor C., C., 2012, Has SOX Been Successful?, Accountingweb, weblog post, 5 September, viewed 13th September 2015, http://www.accountingweb.com/practice/practice-excellence/has-sox-been-successful>