QUESTION 7 The authors truncate the financial era prior that precedes 2002 large

Question

QUESTION 7

The authors truncate the financial era prior that precedes 2002 largely because it does not aid in contextualizing the historical events and advancements in business and professional ethics.

True

False

QUESTION 8

Generally speaking in the aftermath of WorldCom the “ethics environment” for professional accountants involves renewed:

a. Rules & Responsibilities, Quantum Physics, and Governance

b. Roles & Conduct, Governance, and Types of Services Offered

c. Services Offered, Governance, and Civil Settlements!

d. All of the Above

a. Rules & Responsibilities, Quantum Physics, and Governance

b. Roles & Conduct, Governance, and Types of Services Offered

c. Services Offered, Governance, and Civil Settlements!

d. All of the Above

Explanation / Answer

7) True.

The sarbanes-oxley act of 2002 was introduced and implemented as a reaction to numerous frauds and scandals in the corporate and accounting world which included the enron and worldcom frauds. The act was meant to reduce public company accounting reforms and protect the interests of investors. Attention accountability among auditor's and Accountants along with responsibility and maintenance of transparency. The securities and exchange Commission formulated a Boat which would overlook all professional accountants and ensure compliance procedures implemented and adhered to strictly. It also pleased responsibility on top management of every organisation requiring them to certify accuracy of all financial information released by the company. It also insured inclusion of board of directors as inspectors and Guardians and adequate provision of Independence to auditors to ensure they were free from undue influence. Before the introduction of this law no guidelines existed for exposure of accounting fraud and proof of mismanagement due to lack of transparency. Therefore, the period prior to 2002 did not have adequate implementation of ethics within business organisation as a tangible and punishable offence, which invited punishment and legal action and the required transparency ensured attends to cover up financial frauds would be difficult under the new law.

8) b. Roles & Conduct, Governance and types of services offered.

Essential Features of accounting professionals introduced by Public company accounting oversight board (PCAOB) formulated by SEC. The organization representing the profession needs adequate control to be able to provide the required level of integrity and morality within the profession. This was to be achieved through-

Extensive training to be provided on the methods and processes to be employed

Adequate focus and understanding of the need for provision of important services to society by the professionals

To ensure adequate and exhaustive Training to develop and improve required skills largely intellectual in character

To ensure that a standard process be followed and implemented for only licensed or certified professionals under control of a central authority, being granted the right to maintain and audit large and public accounts

Adequate Autonomy be provided to ensure freedom of operation and no fear of threat

Foundation of Ethical Values

To ensure that the profession is significantly guided by and founded on ethical considerations rather than techniques or tool. Ethics should be the guiding force and not the rule book.

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