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Finance & Accounting
Pages 7 (1757 words)
Abstract The business world is heavily dependent on trusting the accounting information provided by public companies. Stakeholder groups such as lenders, investors, suppliers, and employees make decisions concerning public companies based on the assumption that their financial statements are extremely accurate and precise.
The accounting profession is self-regulated and its practitioners are supposed to follow the generally accepted accounting principles (GAAP). The GAAP framework was created in 1973 by the Financial Accounting Standard Board (FASB). In order for accounting to function properly the practice requires compliance of high ethical standards. Back at the beginning of the 21st century there was an avalanche of accounting scandals with the most notorious one being the Enron case. At the time investor confidence went down a lot as the credibility of the accounting profession came into question. In order to raise investor confidence the Securities and Exchange Commission (SEC) in alliance with the US congress passed a law called the Sarbanes-Oxley Act of 2002. The purpose of this paper is to describe the Enron case and to provide a detail analysis of the different aspects included in the Sarbanes and Oxley Act of 2002. The Enron Corporation is one of the worst cases of corporate corruption America has ever seen. The situation was very odd due to the fact that Enron Corporation was regarded as one of most respected companies in the energy industry in the late 1990’s and at the beginning of the 21st century. ...
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