Sox scandal

Additional accountability for corporate Boards, as well as increased criminal and civil penalties for securities violations, increased disclosure regarding executive compensation, insider trading and financial statements are also presented under SOX. (The Institute of Internal Auditors: “The Sarbanes-Oxley Act of 2002: Effect on Audit Committees at Organization Not Publicly Traded.” January 2004. Accessed May 31, 2012 from: http://www.itaudit.org/) The provisions of the act apply, not only

Worldcom’s senior management used fraudulent accounting methods to hide the company’s decreasing earnings by recording expenses as capital expenditures and inflating the entity’s revenue from 1999 to 2002. In total, Worldcom’s estimated asset inflation was $11 billion. The company filed for bankruptcy on July 21, 2002. The WorldCom fraud resulted in a $9 billion restatement, which is the largest in history. WorldCom’s fraudulent reporting totaled over $11 billion over a period of 5 years (Rockness

Organizational misconduct is the chief cause behind corporate accounting scandals. The trusted executives of the corporation participation in actions during a scandal are corrupt, unethical, and illegal. In the United States, the Securities and Exchange Commission (SEC) is typically the government agency that investigates such scandals. One of the most notorious corporate accounting scandals in the United States is the HealthSouth Corporation scandal of 2003. HealthSouth Corporation is one of the United States

many stores to cover losses. Also, Phar-Mor paid for World Baseball League expenses, Manos owned 60% of the teams, and those expenses were moved to bucket accounts. Could the Phar-Mor fraud have been prevented? There is part of SOX where audit partners are rotated every 5 years now (Title II). If a partner at Coopers was auditing when the fraud began in 1989, another would be brought in 5 years later. Either the new auditor would discover the fraud or

The COSO Internal Control Framework The framework describes internal control as a process designed to provide reasonable assurance regarding the achievement of objectives in the following categories: • Effectiveness and efficiency of operations • Reliability of financial reporting • Compliance with applicable laws and regulations COSO goes on to state that the internal controls of an organization can be depicted graphically using a pyramid (Appendix A). The pyramid is comprised of five different

enacted sweeping legislation to protect whistleblowers after a series of corporate scandals, but more is needed. Since whistleblowing plays an important role in the corporate regulatory scheme, this paper will explore policies needed for a more effective corporate governance. Events Leading to the Enactment of Legislation The events that led to legislative action from Congress were the Enron and WorldCom scandals. Enron Corporation was an American energy company based in Houston, Texas which originally

Organizational misconduct is the chief cause behind corporate accounting scandals. The trusted executives of the corporation participation in actions during a scandal are corrupt and illegal. In the United States, the Securities and Exchange Commission (SEC) is typically the government agency that investigates such scandals. One of the most notorious corporate accounting scandals in the United States is the HealthSouth Corporation scandal of 2003. HealthSouth Corporation is one of the United States largest

The Sarbanes-Oxley Act of 2002 was created and implemented specifically following the large corporate scandals involving Enron and WorldCom in 2002. The internal auditing was very poor for the corporate giants and they basically performed however they chose. The Sarbanes-Oxley Act caused the corporations to modify their auditing schemes, the compliances became stricter, and the complaints about the new act grew large in numbers. The corporate managers’ focus on increasing their cash flow and expanding

3) Roots of the scandal The roots of the fraud and the role of internal auditors As explained above, the fraud was implemented by the former CEO Bernard Ebbers and commited by his financial director Scott D. Sullivan. The technique used by Worldcom was pretty simple; indeed, he cooked the books by saving pure operating expenses such as maintenance network in capital expenditure instead of expenses in order to hide its decreasing earnings and to maintain the price of Worldcom’s stock. In summary

history. Shareholders lost 60 billion dollars within a few days, 4500 employees lost their jobs, and the employees lost billions in pension benefits. I had never heard the name of Enron nor Enron’s scandal until I watched a film, “Enron: The Smartest Guys in The Room,” but I realized the Enron scandal affected the whole of the business in the United States. What were the causes of the collapse of