Based on the requirements of the Sarbanes-Oxley Act and SEC reporting requiremen

Question

Based on the requirements of the Sarbanes-Oxley Act and SEC reporting requirements for publically traded companies,

Write a four to five (4-5) page paper in which you:

Assess the roles of the Board of Directors and Chief Executive Officer of a public company for establishing an ethical environment that generates quality accounting and reliable financial reporting for use by shareholders and investors. Provide support for your assessment.

Recommend a strategy for a CEO to implement, leading to an ethical environment that leads to high-quality accounting, reporting, and forecasting. Provide support for your recommendation.

Suggest how corporate management can provide assurances to investors that the performance forecast and expected earnings will be realized, minimizing the volatility of the stock price. Provide support for your suggestions.

Evaluate the consequences to a publically traded company when there is a lack of quality within financial accounting and reporting, indicating how these consequences may be minimized. Provide support for your answer.

Assess the requirements of the Sarbanes-Oxley Act related to accounting quality, indicating whether or not you believe the requirements are sufficient to protect stockholders and potential investors. Provide support for your position.

Explanation / Answer

CODE OF ETHICS FOR THE CHIEF EXECUTIVE OFFICER AND SENIOR FINANCIAL OFFICERS

Code of Ethics applicable to its Chief Executive Officer and senior financial officers to promote honest and ethical conduct are:

Assurance to be provided by the corporate management to the investors regarding the performance forcast is:

Expected Earnings

Minimization of Volatility:

Volatility: Volatility is a statistical measure of the dispersion of returns for a given security or market index. Volatility can either be measured by using the standard deviation or variance between returns from that same security or market index. Commonly, the higher the volatility, the riskier the security.

Consequences of lack of quality within financial accounting and reporting of an publicly traded company are:

It can result from the failure of management’s selection of accounting methods. A management team hould be able to guarantee to the board of directors the accuracy and quality of a company’s financial statements and accounting practices. They should be able to design and implement a robust internal control system to prevent poor reporting by watching for the relevant details in financial reporting.A management team is wasting everyone’s time when they report poor financial statements. The time it takes to pull this false information together and then the time necessary for correcting that information if found hurts the bottom line. recious hours and days that could be used to concentrate on building profitable sales growth go down the drain. This time could have been spent making money. Another long and improper use of reporting is capturing a variety of revenue streams into one account. Those streams should be segregated, allowing the CFO to know what areas of the business are doing the best or not. Misclassification of expenses into the overhead, rather than the cost of goods can mislead the gross margin if not allocated properly. For example, if a company wants to launch a new product, managers will try to determine the sales to off-set the cost and then to make a profit. If they don’t have the proper numbers on gross margin, they will make a decision based on bad numbers. Poor reporting could result in the failure of a new product. By a company addressing the reporting issues, management can make sound profitable decisions. Assess the requirements of the Sarbanes-Oxley Act related to accounting quality, indicatingwhether or not you believe the requirements are sufficient to protect stockholders and potential investors. Provide support for your position.Sarbanes-Oxley Act has been widely known for the strengthening of two major areas to protect investors. One the CEO and CFO have more responsibility and accountability for financial disclosures and related controls.

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