ACC 403 – Auditing
The Effectiveness of Regulations.
There used to be a time in the United States when there were no regulations in place to protect the public from corporate greed and deceit. Publically traded companies used the auditors they had on retainer to audit their financial statements. There was no reason to believe that such large corporations would allow their share holders to fall. That fairytale came to an end with the discovery of the Enron and WorldCom scandals. These nightmares made the public “wake up” and realize that nothing was required of these companies to prove their statements or protect their shareholders. Regulation was…show more content… I, on the other hand, believe in transparency. If you have nothing to hide then government regulation is not a problem. I do see the petty fees and bureaucratic red tape as a source of constant frustration but government regulation keeps people honest. Another positive fact involving government regulation is a consistent set of rules for everyone.
I predict that the Sarbanes-Oxley Act will have a positive effect on corporate fraud by closing the loopholes that upper management has traditionally taken advantage of. Michael J. Gallagher, chairman of the Center for Audit Quality’s Professional Practice Executive Committee, believes that the Sarbanes-Oxley Act has been successful in reaching its objectives by reducing financial fraud (COHN, 2012). I happen to agree with how Mr. Gallagher feels about the effects of Sarbanes-Oxley Act to date. Nothing is going to eliminate the intentional fraud that is taking place on a daily basis. If a company is trying to hide something, they most definitely will find a way. Chief executive officers without a conscience will always make a bad name for hard working, honest companies that happen to be in big business. With the introduction of Sarbanes-Oxley Act and the guidelines that it sets forth, many companies are realizing that they have been making mistakes unwittingly. I believe that these companies are the biggest contributors to the