UNETHICAL ACCOUNTING BEHAVIOR
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Unethical Accounting Behavior
Name
Institution
Course
Lecturer
UNETHICAL ACCOUNTING BEHAVIOR
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The purpose of the financial accounting is to provide information about the performance
and the financial position of the firm to various users that include, among others the investors
and the public, while the soundness of the financial information the depends on the reporting
staff. Sometimes the reporting entity may fail to observe the common principles governing the
accountants, leading to the reporting malpractices that may comprise sales inflation and failure
to recognize expenses (understatement of expenses) and may influence the users (Zadeki et al,
2013).
The Federal Government of the United States and the Local authorities came up with a
federal law, the Sarbanes- Oxley Act (2002) that was meant to protect investors from high profile
corporate and financial activities that impaired their trust and confidence towards the firms. The
main objective of SOX Act was to ensure improved reliability and accuracy in the disclosures
made by corporate entities and has since then played an integral part in creating a regulatory
environment by regulating business practices. The SOX introduced very rigorous rules,
promoting management efficiency by the firms that are publicly traded as well as boosting the
internal controls that would eventually ensure that the public was fully protected against losing
valuable investments due to failures in management by in efficient officials (Gray & Ehoff Jr,
2015).
Generally, investors and the general public were among the most punished by the
fraudulent activities that were initiated, renewing regulatory interventions which forced
accountants to attend ethical programs to boost their decisions in times of difficult tasks. The
SOX Act addresses these issues despite failures by the same management teams that led to
businesses closing down, notably the year 2008/9 when the Bear Stearns, AIG, Wachovia,
among others faced threats of closing down their businesses.
UNETHICAL ACCOUNTING BEHAVIOR
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The Investors Advocate (2013) states that the SOX, together with other bodies like the
SEC (Securities and Exchange Commission) work to ensure integrity and orderliness in the
market place. The practice protects the investors from unfair dealings and disclosing misleading
information by providing an interaction database (EDGAR) that gives a platform of standards of
reporting by all public companies. The imposition of harsher rules will ensure that future
unethical practices are minimized since most companies will work hard to avoid heavy sanctions
and penalties as well.
UNETHICAL ACCOUNTING BEHAVIOR
References
Gray, D., & Ehoff Jr, C. (2015). Sarbanes-Oxley And Dodd Frank: Then There Was
Fraud. Journal of Business & Economics Research (JBER), 13(1), 19-26.
The Investors Advocate. (2013). U.S. Securities and Eschange Commission. Retrieved from
http://www.sec.gov
Zadek, S., Evans, R., & Pruzan, P. (2013). Building Corporate Accountability: Emerging
Practice in Social and Ethical Accounting and Auditing. Routledge.
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