The business environment has expanded in immensity and complexity within the last 100 years. It seems that business scandals, especially those relating to accounting and finance, have become more prevalent in the last 20 years.
There are certain ideals that are expected of someone working in either business, finance, or accounting. These are some basic, but also important moral and ethical demands. It is anticipated that those people in business, especially accounting, will be forthcoming in reporting the true health of a company. This is vital due to how many people rely on the information that is provided from financial statements. Creditors and vendors use it to determine creditworthiness. Potential shareholders use the information to decide if they will invest in company stock, and the government will use the information to verify that the firm is conducting business within legal boundaries.
In addition, it is the hope that if someone knows of a firm’s wrongdoing that it be reported to the either business, or legal authorities, or both. Accountants are in a prime position to see the operational core of a firm. They are able to distinguish how assets and liabilities are fluctuating, as well as, debt and cash flows. They are expected to point out discrepancies to a supervisor, and gross ethical misconduct to suitable agen...
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...c from unscrupulous accounting practices. Top management executives certify the validity of financial statements. This way, they cannot say they were unaware of such poor accounting practices. Also, the Public Company Accounting Oversight Board (PCAOB) was established. This board oversees audits of publically traded companies to ensure they are accurate. This in addition to SOX will help deter accounting scandals.
Unfortunately, accounting scandals and business problems will always be around. However, they can be lessened in severity, or prevented if people act by their code of ethics. Our moral compass will assist us to decide what is right, right, and legal. Since we know what is right, it is our duty to speak-up and report wrongdoings of firms. By stopping a probably quickly, hopefully we can prevent seeing another Enron-sized scandal ever again in our future.
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