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and, most internal auditors are still reporting to the CEO or chief financial officers -- the very people who were responsible for most of the past enormous scandals. Therefore, the affectivity of internal audits in correcting the original problems that caused the Enron scandal, for instance, is minimal at best right now. While SOX requires management to test internal controls over financial aspects of the corporation, this reporting structure poses obstacles.
Risk Management
While risk management, as part of corporate governance, includes identifying and tracking all risk areas and developing plans to deal with those risks, including fraud, it is clear that only with frequent re-assessment can risk management become an effective tool to control illegal and unethical practices. Again, along with other effective corporate governance activities and responsible company management, risk management has the potential to avoid another Enron.
Conclusion
HealthSouth Corp., Chiquita Brands, AIG, Bernard Madoff -- all are financial scandals since 2002, when SOX...
If corporate top level management is inclined to cheat and commit fraud, nothing, evidently, will stop them. We can only hope that the measures now in process will ease the consequences to investors and punish the offenders.
Bibliography
Fusaro, P., & Miller, R. (2002). What went wrong at Enron: everyone's guide to the largest bankruptcy in U.S. history. Hoboken, NJ: John Wiley and Sons.
OSU . (n.d.). Brief summary of Sarbanes-Oxley Act of 2002. Retrieved September 27, 2009, from Ohio State University (OSU): http://ocdc.osu.edu/pdf/sarbanes.pdf
Thapa, S., & Brown, C. (2007, January). Corporate scandals, the Sarbanes-Oxley act of 2002 and equity prices. Retrieved September 28, 2009, from findarticles.com (from Academy of Accounting and Financial Studies Journal): http://findarticles.com/p/articles/mi_hb6182/is_1_11/ai_n28565873/
Wallace, D. (2007, October 8). What has SOX done for us lately? Retrieved September 28, 2009, from s-ox.com: http://www.s-ox.com/dsp_getFeaturesDetails.cfm?CID=2002
Bibliography
Fusaro, P., & Miller, R. (2002). What went wrong at Enron: everyone's guide to the largest bankruptcy in U.S. history. Hoboken, NJ: John Wiley and Sons.
OSU . (n.d.). Brief summary of Sarbanes-Oxley Act of 2002. Retrieved September 27, 2009, from Ohio State University (OSU): http://ocdc.osu.edu/pdf/sarbanes.pdf
Thapa, S., & Brown, C. (2007, January). Corporate scandals, the Sarbanes-Oxley act of 2002 and equity prices. Retrieved September 28, 2009, from findarticles.com (from Academy of Accounting and Financial Studies Journal): http://findarticles.com/p/articles/mi_hb6182/is_1_11/ai_n28565873/
Wallace, D. (2007, October 8). What has SOX done for us lately? Retrieved September 28, 2009, from s-ox.com: http://www.s-ox.com/dsp_getFeaturesDetails.cfm?CID=2002
Internal Control and Accounting Analysis of ABC Limited: Analysis of Weaknesses and Recommendations The report was prepared to cover the requirements of the AAT ICAS unit. The AAT ICAS refers to an Internal Control and Accounting System where the report serves as investigation of the weakness area of the business control and makes the recommendation to fix this problem. The following report reviews the restaurant business particular in payroll area. The
Accounting internal control is the methods and procedures used to ensure the accuracy and validity of the financial statements, as well as to protect against abuse and fraud, making sure information is delivered in an accurate and timely manner. (Griffin) Internal controls consist of information systems and physical controls that are carried out in the line of job duty. The two primary goals of internal control is to ensure that
Corporate Governance Two different, yet related corporate governance definitions have been presented in this paper (Mallin, 2006: 3). Sometimes they cause confusions and controversy and ultimately affect the implementation of tightening of governance (Windsor, 2009). The 1992 Cadbury Report, which presented the major proposals for tightening governance, described governance as the system through which firms are managed, regulated and supervised (Cadbury, 1992: 15). The fundamental agency idea emphasizes that corporate governance has
Corporate Governance: A review of Literature What is Corporate Governance? Principles of Corporate Governance Theoretical foundations of corporate governance Agency theory Stewardship theory Stakeholder theory Post-Enron theories Corporate Governance: The changing trends Recent developments on regulatory front and research Corporate Governance: Relationship with market indicators Venture Capital Model: Impact on Corporate Governance Appendix I- Examples of Corporate Governing bodies This paper is a review of pertinent literature on corporate governance. Corporate governance addresses the control issues created due to the separation of ownership
SOX Impact on Corporate Financial Reporting The Sarbanes-Oxley Act of 2002 (SOX) led to widespread changes in how governance, risk, compliance, financial reporting and decision-making are managed in publically-held coproratio9ns today. Experts in the field of governance and compliance have concluded that the SOX Act immediately redefined the scope of financial reporting and risk definition (Hagerty, 2006). This was especially prevalent in the bond markets, where forcing greater disclosure of financial
The amount and complexity of information created and overseen by the auditors in terms of expenses, earnings, and taxes will also increase. The ongoing growth of global organizations is also demanding greater auditing expertise concerning international laws and trade in addition to international mergers and acquisitions. Following Enron and the other financial scandals, Congress passed laws to curtail organizational accounting fraud. This legislation requires public companies to maintain established internal