Corporate industry and big business in the United States has always been a problem, has seen a great many troubles when it comes to keeping good books. It is the case, that companies should hire honest, forthright people who for whatever reason would want to keep themselves safe from fines and prison sentences.
However, not all are that way, and for the person who makes merely a check to get by these type practices can be seen as thuggish being done not as like the common man’s need of desperation, but out of a persona of greed and lustful living which does not work well when there are many stakeholders. In this instance, identifying who the stakeholders are is of utmost importance, because as mentioned in another article the stakeholder is anyone who invests their money; whether it be the mother buying shoes, the family investing in a burial policy, the clerk who rings up a purchase, or the waiter who handles a dinner order. Therefore there is more at stake than someone losing their money in a shady business deal, or rather, someone padding their expenses. In this article, there is protection presented for the corporate industry which spells out policy for accounting practice requirement, and consumer protection.
The propensity for people to cheat is a common among the American people. As stated, earlier whether with much money, or lack thereof people manipulate their financial records. One can be seen on annual income tax returns where people lie about how much money they make to either avoid paying taxes, or to gain an incentive such as Earned Income Credit [EIC]. In this instance, business owners might be tempted to be dishonest about how much money they make and for this cause, specifically for larger corporations there must be policy placed to help level the fields when lower taxed payers seemingly battle other industry giants who escape to other countries hiding their increases. The Sarbanes-Oxley Act [SOX] was created in the year 2002, and is a mandatory law which corporations must comply with whether or not the organization is a large or small entity.The policy was named for two senators who promoted the act regulating the financial practices of corporations.
There are several sections to mention here. They are: 302, 401, 404,409, 802, and 906, however, there is discussion of one Title 302 which speaks of the Corporate Responsibility for Financial Reports [A Guide to Sarbanes-Oxley: Section 302]. Such is the case of a situation leading up to SOX where “multiple publicly-traded businesses jacked up their stock prices by “publishing false or deceptive financial statements” (Hooper, 2010). Hence, as result the value of the stock market program dropped $6 million according to Charles Hooper who wrote the article “Why Was the Sarbanes-Oxley Act of 2002 Created and How Does It Impact Financial Reporting Today?” In essence, some firms decidedly become more engrossed with tweaking their numbers in stock than preferring honest business merits.
According to the same article, Hooper (2010) stated that SOX impacted the mainstream of corporate firms in their correcting their requirements of company accounting policy, and within its umbrella the establishment of the Public Company Accounting Oversight Bureau [PCAOB], a non-profit entity, and one that requires accounting firms to be registered making reporting unregistered company public trade illegal. In an effort to bring example, the Waste Management Systems (1998), located in Houston, Texas was a company that decided that padding their account to make their stock go up was worth the fall. Reportedly, the company’s accounting department recorded “$1.7 billion in bogus increase.
Apparently, some of the top executives, along with their auditing team decided among themselves that they, according to “The Worst Accounting Scandals of All Time,” giving information about depreciation and length of time for their property, machinery and their plant. As is always to case, the scheme came unglued when a new management team took over, and the penalties that pursued their wayward acts amounted to $7 million in fines [Accounting Degree Scandals, 2015]. Of course there were more scandals, such and Enron where people actually were tried and sent to prison and some others with faulty books. Consequently, the report stated that it was WorldCom that was the spark that started the Sarbanes-Oxley Act.
With all the drama surrounding corporate crooks and dishonest practices in high places one has to wonder is there any hope for the little people who do business and who make the money that fuel those big business honchoes in high place, and the answer is a resounding yes there is a way to handle the big dogs. The Consumer Financial Protection Bureau is a place that can help sort things out for the people.
Our mission is to make markets for consumer financial products and services work for
Americans — whether they are applying for a mortgage, choosing among credit cards, or
using any number of other consumer financial products [CDPB, 2015].
In essence, there is a place to file complaints concerning products, services such as credit discrimination, college funding, seeking loans, mortgage lending practices which is well worth the time to seek guidance. Notably, some reasons of why this policy may have been set forth is the area of discriminatory practice in credit where bankers would not loan blacks money for to buy a home, and one big scandal where Bank of America was caught charging higher interest rates to blacks than whites in regards to credit.
Ultimately, the policy set in place by Sarbanes-Oxley; along with the protective measures for consumers is spot on. In saying that these policies are right one must have the ability to know what is right and wrong in life and then move on to business—it is all about the stakeholder, not merely those who seeming hold the stakes as in monetary additions to make a company work but those who show up to work; and, those who spend. In this, the gathering is true that the stakeholder position of the corporate industry is collective. That means families, that means investors, their employees and those who make stock purchases raise. People have a right to know what their investments are doing in trade, and, it is the case that one cannot be certain that measures are being adhered to. Hence, accounting practices whether for the large business or the small is everyone’s business.