The Sarbanes Oxley Act Of 2002

2420 WordsMar 10, 201610 Pages
Foremost, a company hires an auditor to preform an audit. He/she is paid $1,000,000 dollars for their services. In addition, the company is willing to pay the auditor an additional $700,000 for providing more services. This additional pay may stem from the auditor’s friendly relationship with the company’s management. This scenario could potentially cause a huge ethical dilemma for the auditor. Given the friendship between the two parties, the auditor could very well be tempted to “cook the books” by management. This could very well happen if the company needs to improve their company’s earnings. Friendship combined with lofty pay could easily persuade the auditor into disregarding the GAAP as well as the Sarbanes-Oxley Act of 2002. Furthermore, the nature of the job is highly unethical. As it violates several provisions of the aforementioned Sarbanes-Oxley Act. The auditor, management, and the top executives of the company will all be affected by this ethical dilemma. By taking the additional work the auditor would be violating several provisions of the Sarbanes-Oxley act. These provisions include: the “nonaudit services” and “hiring of auditor” provisions. The “nonaudit services” provision, states that “It’s unlawful for the auditors of public companies to also preform certain nonaudit services, such as consulting, for their clients (Sarbanes-Oxley Act, 2002).” Moreover, the “hiring of auditor” provision states that “Audit firms are hired by the audit committee of the

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