In recent times, there have been accounting scandals that have stunned the finance and accounting realm, and thereby reemphasized the significance of maintaining proper accounting practices. The recent accounting scandal of Olympus Corporation, a Japanese manufacturing company for cameras and endoscopes is selected for this study. The company's scandal encompassed a 13-year period of accounting irregularities totaling almost $1.7 billion (Infinit Accounting, 2014).Audit Report Issued by CPA Firm
When Michael C. Woodford was appointed as president and Chief Executive Officer (CEO) of Olympus Corporation, he endeavored to make certain that the financial statements of the company were accurate and reliable. It is at this time that he discovered doubtful transactions in the statements of financial position of the company, with respect to the expenses reported. He instantly started inquisitions regarding these transactions, particularly about the inflated M&A advisory payments. Woodford was sacked by Olympus two weeks later upon deliberating with the management in an effort to remedy the inconsistencies with the books. He thereafter made the decision to report to the British authorities as a whistleblower (Elam et al., 2014). numerous accounting and financial irregularities were uncovered in the financial statements of the company after review, which contained false statements reported by the executives. However, regardless of the apprehensions on...
Financial Accounting Accounting Concepts Financial Statements (Regulatory oversight) The rapid failure and bankruptcy of Enron has prompted severe criticism of the nation's financial reporting and auditing systems, which are fundamental to maintaining investor confidence in U.S. capital markets; there are four areas in which the Enron failure revealed serious problems: corporate governance, the independent audit of financial statements, oversight of the accounting profession, and accounting and financial reporting issues (GAO, 2002). The financial
The purpose of this research is to fill in the gap discovered in the literature review. The impact the Sarbanes-Oxley Act on companies is measurable. However, not much is known about how these companies adjusted in order to absorb the impact of compliance. In order fully to understand the impact of Sarbanes-Oxley on corporations, one must understand how they absorbed the expenses and the impact that it may have had
Ethics and Regulatory Issues Related party transactions reported on by Arthur Andersen & Co. Flaw in the accounting firm's logic Checklist for special projects performed by external auditors Checklist Proposed rules or laws to prevent similar occurrences Enron was one of the Wall Street's favorite blue chip stocks before an accounting scandal of the firm surfaced in 2000. The revelation that company has been misreporting its profits and losses during 1990s crashed the company's stock. The
CPA Profession The accounting profession has had more than its share of ups and downs in the last two decades. The business environment in this period, led by major technological innovations, has changed drastically and become infinitely complex -- making the job of accountants far more varied. Whereas once Certified Public Accountants (CPAs) worked almost exclusively in accounting, auditing or tax preparation, now CPA firms have to handle fields such
Enron could engage in their derivative trading strategy with no fear of government intervention because derivative trading was specifically exempted from government regulation. Due in part to a ruling by the Commodity Futures Trading Commission's (CFTC) chairwoman, Wendy Graham, derivatives remained free of regulatory oversight. Ms. Graham, wife of Texas senator Phil Graham, made this ruling 5 weeks before resigning as chairwoman of the CFTC and joining the Enron Board
Because the home country is not required to reimburse foreign depositors for losses, there is no corresponding financial penalty for lax supervision; there is, though, a benefit to the country with lenient regulatory policies because of increased revenues generated and the employment opportunities these services provide (Edwards 1999). Furthermore, banks seeking to conduct multinational business are attracted to countries where incorporation laws and the regulatory framework offer less regulatory oversight
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