Acc 291 Week 5 Dq 1 & 2

DQ 1

What is an example or examples of a potentially unethical accounting situation? An example of a potentially unethical situation would be if someone who work for a non-profit organization was depositing donations that were received into their own account or even their own pocket to keep themselves from getting caught. There was a situation in my area awhile back, I can't remember what the non-profit organization was but what cash donations came in, the lady who was responsible for recording and depositing the donations was keeping the donations for herself.

Why is the situation unethical? This situation is unethical because the donations made were meant to go into an account of the non-profit organization that helped the less fortunate; it might have been animal related. This woman knew what she was doing was wrong by taking the money for her own gain, rather then it going towards the intended purpose thought by those who generously donated.

How do ethics affect the financial results of a company? Bad ethics affect the financial results of a company in many ways, but the biggest is the turmoil that will happen because the public, investors, lenders, and supplies will lose the trust in the company and will not want to associate with the company anymore, and that will result in complete operational and financial failure of the company.

Reference

Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2010). Financial accounting (7th ed.). Hoboken, NJ: John Wiley & Sons.

DQ 2

Do you think the Sarbanes-Oxley Act has made a difference in the ethical behavior of companies regarding their financial accounting? Why or why not? The Sarbanes-Oxley Act (SOX) was established in 2002 to help ease the worries of the public after a wide rash of unethical and fraudulent scandals occurred. This act requires that all publically traded US corporations have a strict set of internal controls in place to assure that all businesses have controlled environments, risk assessments, control activities, information and communication, and monitoring in order to keep unethical acts under control (Weygandt, Kimmel, & Kieson, 2010).

The Sarbanes-Oxley act also brought forth the Public Company Accounting Oversight Board (PCAOB) that oversees and audits the standards and regulates the auditor activities (Weygandt, Kimmel, & Kieson, 2010).

I believe SOX has made a big difference in the ethical behavior of companies regarding financial accounting. I believe many companies pay closer attention to not only assuring their work is accurate but also watching for others work to be accurate. The internal controls allow for establishment of responsibility, segregation of duties, documentation procedures, physical controls, independent internal verification, and human resource