Effects of Unethical Behavior

In: Business and Management

Submitted By jmitchell07
Words 438
Pages 2
Effect of Unethical Behavior Article Analysis

University of Phoenix
Principles of Accounting 2

May 27, 2012

Effect of Unethical Behavior Article Analysis

In this paper I will identify situations that might lead to unethical practices and behavior in accounting. I will also examine the effects of the Sarbanes-Oxley Act of 2002 on financial statements.

Since the Enron scandal at the end of 2001 there have been several reports of unethical practices as well as poor behavior. So what exactly leads someone to report false information? In most cases that I have seen it usually begins with minor accounting infractions. When companies don’t perform well financially, stock holders may lose millions of dollars on their investments. The person in charge may decide to falsify the figures when reporting them to insure their position within their company. I believe the feel they can correct the numbers before anyone would notice. On the other hand, some CEO’s and financial officers are make bonuses and profits when they show how well a company is doing. Their own personal greed is the only thing that concerns them no matter how well the company is doing. It might be several top executives involved to just a couple of individuals, however the people who pay for their unethical decisions are the stock holders, employees and the public.

The Sarbanes-Oxley Act was enacted July 29, 2002 and was named after U. S. Senator Paul Sarbanes and U. S. Representative Michael G. Oxley. According to CNNMoney March 24, 2010 a report by McGuffin a highly readable 2000 page report, Lehman Brothers has been accused of using an accounting loophole to massage its books, and they question whether regulators can anticipate or prevent malfeasance. The idea of Sarbanes-Oxley was to stop people from finding and using loopholes in accounting and increase transparency within…...

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