The Sarbanes Oxley Act Dealt With Four Major Issues Accounting Essay

The Sarbanes Oxley Act Dealt With iv Major Issues Accounting EssayWhat responsibilities did David Duncan owe to Arthur Andersen? To Enrons commission? To Enrons stockholders? To the story trade?David Duncan owed Arthur Anderson the dish out to do what a reasonable employee would do in every situation to include a certificate of indebtedness to work with reasonable safeguard and skill. Not to disrupt business, non to compete in business against Arthur Anderson objet dart still working for them as an employee or carriage acts of incarnate espionage, nor to part Arthur Anderson?s confidential discipline. Duncan had the duty and responsibility to be honest, and carry extinct and follow the orders of Arthur Anderson, so long as they were legal, and if non to disclose the wrongdoing, evening if this give incriminate him.As a schoolmaster accountant, David Duncan had an obligation to record, bring home the bacon, and prove to information estimationing the economic af u ncloudeds of Enron. Beca use up investors and creditors place great reliance on fiscal statements in making their investment and credit endings, it is imperative that the financial reporting process be truthful and dependable. Thus, the responsibility Duncan owed to Enron?s management and Enron?s Stockholders was to exercise the general duty of performance, skill and c ar of the usu eachy prudent accountant in the same circumstances and observe a standard of ethical or social responsibility. This duty is not completely morally right, but it is required by law, and arises from the law of negligence, contract, and fiduciaries required by those in captain gos, such as accountants.David Duncan owed a responsibility to the accounting handicraft to uphold and adhere to the ethical code of the profession. These codes of ethics are established throughout the professional associations of accountants such as The American demonstrate of testify Public Accountants, The Institute of M anagement Accountants and the Institute of Internal Auditors. These codes provide guidelines for responsible behavior by accounting professionals, and emphasize integrity, objectivity, confidentiality, and competency.Duncan failed in his responsibilities to Arthur Anderson, Enron?s management and stockholders, and the accounting profession. He did not hold in his integrity, objectivity, confidentiality, and competency. He did not properly follow Generally Accepted Accounting Principles and disclose Enron?s true financial status, resulting in an adverse impact to Arthur Anderson employees and Enron?s stockholders and employees. When he suspected Enron of unethical behavior, he failed to inform management at Enron or Arthur Anderson, his silence was a passive permissiveness to their behavior. The American Institute of Certified Public Accountants code of ethics suggests that the best saki of the client is served when accountants forgather their responsibility to the public, once ag ain Duncan failed.What are the ethical responsibilities of a corporate attorney, such as Nancy synagogue, who works for an aggressive client wishing to raise up the envelope of legality?The professional duties of an attorney, who represents or advises auditors, as was the case with Nancy Temple and Arthur Anderson, essential incorporate an awareness of the auditors professional responsibilities.Nancy Temple ultimately owes her duty to Arthur Andersen as in-house counsel and was ethically bound to pursue the interests of her client and in doing so serves the public interest best by representing Arthur Andersen?s interests. As an attorney admitted to the Illinois bar, Nancy Temple was subject to the Illinois Rules of Professional Conduct. These rules impose professional obligations of competence, diligence, communication, and confidentiality. downstairs some(prenominal) the Illinois Rules and the Model Rules, if a lawyer representing an organization knows that an officer, employ ee, or separate person associated with the organization is violating the law in a manner that is in all likelihood to result in substantial injury to the organization, the lawyer shall respond by taking reasonably necessary measures that are in the best interest of the organization. Such measures may ultimately result in the lawyers resignation, but shall be knowing to minimize the risk of revealing confidential information.Nancy Temple, although not be required to disclose Arthur Andersen?s confidential information, she could clear elected to recant representation of Arthur Anderson?s due to their involvement in fraud and vile acts.Under what conditions should an employee such as Sherron Watkins blow the whistle to outside governance? To whom did she owe truth?Although touted as the Enron whistle-blower Sherron Watkins never really blew a whistle. Whistle-blowing is the release of information by a member or former(prenominal) member of an organization who has evidence of i llegal or immoral conduct in the organization, or conduct in the organization that is not in the public interest. Whistle-blowing reveals information that would not be ordinarily revealed in day-to-day context. In almost every case whistle-blowing involves an actual or at least a declared intention to prevent something bad that would new(prenominal) than occur (Beauchamp, Bowie, Arnold, 2008 Boatright, 2000).Sharron Watkins, as a whistle-blower should have indite the earn to the Houston Chronicle Watkins wrote it to awareness Lay, stating Were such a crooked companionship and warned him of voltage whistle-blowers lurking among them, and recommended actions to downplay, or minimize the damage (Time Magazine Beauchamp, Bowie, Arnold, 2008).In the determination and under which conditions an employee should blow the whistle to outside authorities there are twain theories, DE Georges? Standard theory and Davis?s Complicity theory.According to DE Georges? Standard Theory, whistl e-blowing is permissible when the company will do serious harm, the whistle-blower has reported the threat to her schoolmaster but concludes it will not be fixed, and the whistle-blower has exhausted other internal reporting procedures. Furthermore, whistle-blowing is required when there is convincing evidence to an unprejudiced observer, and a good reason to recollect revealing the threat will prevent the harm at reasonable cost (Beauchamp, Bowie, Arnold, 2008).According to Davis?s Complicity Theory, whistle-blowing is morally required when the information derives from the soulfulnesss work at the organization and not obtained through illegal means, such as spying. That the individual is a military volunteer member of the organization and are not being held against their will or coerced. The individual believes there is serious moral wrong-doing, not a harm. The individual believes their work will contribute or in some demeanor be supportive to the moral wrong if they do not go public (Beauchamp, Bowie, Arnold, 2008).Sharon Watkins, Vice President and a certified public accountant, knew the information was damaging, both harmful and morally wrong, to investors, stockholders, and employees alike. She did informed her supervisor chief operating officer Ken Lay of perceived irregularities in the accounting practices of Fastow?s Special part entities. Therefore, within the context of both theories, she was justified to alert outside authorizes.To whom did Sharron Watkins owe loyalty? Ronald Duska argues that the employee does not have an obligation of loyalty to a company, and that whistle-blowing is permissible, peculiarly when a company is harming society (Beauchamp, Bowie, Arnold, 2008). Additionally, since Sharron Watkins was a member of a professional organization as a Certified Public Accountant, she was required by their professional code of ethics to report unethical behavior on the part of her fellow professionals in order to regulate their pro fession, therefore she owed loyalty to the public, her profession and herself.To whom does the mesa of directors owe their aboriginal responsibility? Can you think of any law or regulations that would help ensure that boards meet their primary responsibilities?In the United States, corporate law dictates that a board of directors must monitor the leadership of the trustworthy to ensure that the corporation is run mightily and effectively in the long-term interest of shareholders. Thus, the board of directors owes their primary responsibility to investors they owe both the duty of care, or due diligence, and the duty of loyalty, or putting the investors first in their decision-making.Boards of directors are generally recognized as having five key charges. First, and most important, they must select, monitor, evaluate, and when necessary replace the chief executive officer of the firm, with a key underlying duty of engaging in careful, pass around succession planning. Second, th e board is responsible for ratifying the company?s overarching vision and strategic plan, once it is developed by the CEO and his or her staff. Advising and counseling the CEO and other top managers as needed is a third function of the board, underscoring the importance of a board?s diversity of expertise. The board?s fourth responsibility is to locate and nominate high-quality board members and to evaluate the processes of the board and the performance of both the board and its members. Finally, the board is responsible for ensuring the adequacy of the firm?s internal control systems, a duty that is now fortify by the Sarbanes-Oxley Act.The Sarbanes-Oxley Act of 2002 act was designed to protect shareholder measure out and the general public from corporate wrongdoing. The Sarbanes-Oxley Act dealt with four major issues in corporate governance of public corporations. First, the act created an oversight board to garnish and enforce auditing standards and discipline public company a uditors. Second, the act intended to cling to auditor independence. Third, the act increased corporate responsibility, by requiring that CEOs and CFOs certify all periodic reports containing the company?s financial results. Having knowledge of the certification of insincere statements is subject to criminal liability. Finally, the act enhanced financial manifestation with regard to the off-balance-sheet transactions and obligations with consolidated entities and individuals. These key provisions of the Sarbanes-Oxley Act have importantly strengthened the role of the board of directors and have made managements more accountable.What responsibilities do government regulators owe to business? To the market? To the general public? unitary of the principal responsibilities of government regulators is to ensure that the laws they enforce are regularly reviewed, and occasionally adjusted, to take account of changing conditions in the world.? Federal Trade equipGovernment regulators, s uch as the U.S. Securities and Exchange Commission, are responsible for administering laws written to provide protection for investors. The responsibility government regulators owe to businesses is to ensure they are in compliance with the laws in effect. With regard to the market, the responsibility to ensures markets are fair and honest, and if necessary, enforce the laws through the appropriate sanctions. To the public, regulators owe the responsibility of trust, to provide the arrogance to the public that the market and business are conducting operations in a fair, and legal manner and to provide for informed investment analysis and decision making by the public investors, principally by ensuring adequate disclosure of material informationAre accounting and law professions or businesses? What is the inconsistency?A business is a legally recognized organization designed to provide goods, services, or both to consumers or other business in exchange for money. Whereas a professio n is a vocation that is to supply bountiful counsel and service to others for a direct and definite compensation without antepast of other business gains. In that the primary motive of business is to represent a profit, and in doing so may fail, a professional is comparatively safe as he earns fees for his services and there cannot be ban fees. In establishing a business, no special educational or proficient mights are required, other than providing a need, service, or commodity to the market, a professional is required to acquire a particular degree or qualification prescribed by a particular professional body. Most importantly, in a business upon completion of the transaction there is no self-reliance or implied contract of any sort, but in a profession their actions, deeds, or services do accompany an implied contract, a contract which provides that the service or information provided is truthful, complete, and verifiable. A professionals good reputation is one of his or h er most important possessionsPeople need to have confidence in the quality of the complex services provided by professionals. Because of these high expectations, professions have pick out codes of ethics, also known as codes of professional conduct. Codes of professional conduct are of utmost importance to professionals and those who rely on their services. These ethical codes call for their members to maintain a level of self-discipline that goes beyond the requirements of laws and regulations.Professionals know that people who use their services, especially decision makers, expect them to be highly competent, reliable, and objective. Those who work in a professional field must not only be well qualified but must also possess a high degree of professional integrity.Both accountants and attorneys are professions, in that they both must supply disinterested counsel for a set fee, they are hired or contracted to perform a service and in doing that service, are to provided an honest a ssessment or truthful information. Thus they have a professional responsibility to their clients, to the government, and to the public.