Ethics in Accounting 1

Ethics in Accounting Mike Fasano FIN-324 Jerry Cook University of Phoenix January 26, 2006

Ethics in Accounting 2

Ethics in Accounting When one thinks of the importance of ethics, especially in retaliation to accounting, we often think of corporate entities that are guilty of violation of both ethical business practices and violation of the 2002 Sarbanes-Oxley Act. One such organization that immediately comes to mind is Enron. In the article Enron: Where are Americas CEOS, we will discuss several aspects associated with ethics in accounting. This article concerns how the collapse of Enron, which was the biggest corporate bankruptcy in U.S. history, affected accounting practices and corporate ethics. Additionally, this article looks at the CEOs role into verifying sound accounting practices and what reasons are associated with oversight by CEOs that contribute to unethical practices. While there is no real correlation between this articles description of CEO oversight when compared directly to my organization, one could infer that as a member of the Navy and an employee of the government, my seniors and myself are charged with the same ethics and morals that any other civilian manager or CEO would be. That is to say that we are charged with ensuring compliance with laws and requirements governing the management of our accounting practices and maintaining an ethical work environment that is not limited to just accounting.

Ethics in Accounting 3 Since the practices that led to the ultimate downfall of Enron were one of the primary reasons that the 2002 SarbanesOxley Act was passed, this article certainly describes the necessity for this act. While many executives and auditors are probably busy double-checking their books, looking to see if their financial and accounting practices are beyond reproach, many are not (Borres 2002). Are there a lot of problems with off-balance-sheet financing or of reporting pro-forma earnings? Yes. Corporate America is rife with those sorts of issues. (Borrus 2002). It is due to this fact that the enactment of the Sarbanes-Oxley Act will aid in dissuading any executives or other managers and employees from even thinking of conducting unethical accounting or business practices and making the right financial decisions. Ethics and sound financial decisions should be the hallmark of a true professional. CEOs and top-level executives are ultimately responsible for the oversight and management of all endeavors of their companies operation. This is not a pleasant task. No CEO for that matter wants to shoulder burdens that are not of his or her own making. Managing a company well and answering to shareholders is a tough job. However, exceptional savvy is what's expected from the corner office. Doing something before someone pressures you to do it is often what real

Ethics in Accounting 4 leadership is about. Smart CEOs will anticipate the gathering Enron storm and plan their strategies (Borrus 2002).

Ethics in Accounting 5 References: Albrecht, W., Stice, J., Stice, E., & Swain, M. (2005). Accounting: concepts & applications. 9th ed. Mason, OH: Thomas. Brealey, R.A., Myers, S.C., Marcus, A.J. (2004). Fundamentals of Corporate Finance. 4th ed. New York, NY: McGraw Hill/Irwin. Borrus, A. (2002, Dec 02). Enron: Where are Americas CEOS? Business Week Online, Retrieved Jan 25, 2006, from http://web33.epnet.com/citation.asp? tb=1&_ug=sid+14DB7021%2DFFCF%2D4BF0%2D8775%2D68299D1210CB %40sessionmgr5+dbs+aph%2Cf5h%2Cbuh%2Cawh%2Cufh%2Ctfh %2Czbh+cp+1+1192&_us=frn+1+hd+True+hs+False+or+Date+ss+SO+s m+KS+sl+%2D1+dstb+KS+mh+1+ri+KAAACB4C00014996+7BBA&_uso=tg %5B0+%2D+db%5B6+%2Dzbh+db%5B5+%2Dufh+db%5B4+%2Dtfh+db%5B3+ %2Df5h+db%5B2+%2Dbuh+db%5B1+%2Dawh+db%5B0+ %2Daph+hd+False+clv%5B0+%2DY+op%5B0+%2D+cli%5B0+%2DFT+st %5B0+%2D%22ethics++in++accounting%22+ex%5B0+ %2Dproximity+10DA&fn=1&rn=20.