레이블이 Chesapeake Tax and Accounting인 게시물을 표시합니다. 모든 게시물 표시
레이블이 Chesapeake Tax and Accounting인 게시물을 표시합니다. 모든 게시물 표시

2013년 11월 30일 토요일

About 'accounting services companies'|...The best way to illustrate the benefits of the Google service would be to look a small to medium sized company. A company with a few dozen employees may not have the...







About 'accounting services companies'|...The best way to illustrate the benefits of the Google service would be to look a small to medium sized company. A company with a few dozen employees may not have the...








Essentially,               "the               goal               of               accounting               is               to               provide               useful               information               for               decisions"               (Wild,               Larson               &               Chiapetta,               2007,               p.

8).

Countless               individuals               use               accounting               information               every               day               from               potential               creditors               to               company               managers               to               average               people               like               you               and               me               (Wild               et               al,               2007,               p.

5-6).

Each               of               these               different               users               of               accounting               information               make               crucial               decisions               based               upon               this               information,               trusting               that               those               who               prepared               it               made               it               as               accurate               and               honest               as               possible.

Consequently,               accounting               must               be               paired               with               ethics               or               it               will               simply               lose               its               usefulness               and               damage               our               overall               social               and               economic               welfare.

Unfortunately,               though,               managers               and               other               senior               members               of               many               of               America's               most               trusted               businesses               (e.g.,               Enron               and               WorldCom)               forgot               this               important               reality               and               manipulated               accounting               information               for               their               own               selfish               purposes.

In               the               end,               this               has               caused               a               general               mistrust               of               businesses,               especially               large               corporations,               among               many               Americans               (Wild               et               al,               2007,               p.

6,               8).

To               help               restore               Americans'               trust               in               those               companies               that               distribute               their               stocks               to               the               public,               "the               Sarbanes               Oxley               Act               was               created               to               inspect               and               monitor               companies               in               an               attempt               to               protect               shareholders               and               investors..."               (AboutSarbanesOxley.com,               n.d.).

Congress               designed               the               Sarbanes-Oxley               Act               (SOX)               to               make               these               businesses               employ               better               supervision               of               their               company               accounting               practices,               as               well               as               stricter               internal               controls               (Wild               et               al,               2007,               p.

11).
               To               understand               how               SOX               has               affected               the               reporting               requirements               of               public               companies               today,               we               will               need               to               take               a               closer               look               at               the               titles               of               SOX.

Let               us               begin               with               Title               I               of               SOX,               which               outlines               the               establishment               of               the               Public               Company               Accounting               Oversight               Board.

This               board               is               responsible               for               such               things               as               (1)               determining               what               accounting               firms               can               legally               audit               public               companies,               (2)               establishing               the               set               of               standards               these               firms               must               maintain               to               legally               serve               in               this               function,               and               (3)               penalizing               any               of               these               auditors               that               do               not               comply               with               the               requirements               of               SOX               or               the               Board               (Sarbanes-Oxley.com,               n.d.,               Section               101).

As               a               result,               SOX               has               changed               what               documentation               and               controls               these               firms               are               required               to               maintain               when               they               audit               public               companies.

For               example,               auditors               must               create               (and               keep               for               a               minimum               of               7               years)               documentation               that               shows               how               they               reached               their               conclusion               on               their               final               report.

Furthermore,               auditors               are               required               to               explain               all               of               their               efforts               to               test               public               companies'               internal               controls               (Sarbanes-Oxley.com,               n.d.,               Section               103).
               Next,               we               will               discuss               Title               II               of               SOX,               which               regulates               the               independence               of               auditors.

Section               201               explains               that               auditors               are               no               longer               permitted               to               provide               most               non-auditing               services               (e.g.,               bookkeeping)               once               they               have               audited               a               public               business               (Sarbanes-Oxley.com,               n.d.,               Section               201).

Furthermore,               all               material               information               about               the               auditor's               services               and               communications               with               the               business's               management               must               be               fully               disclosed               to               that               company's               audit               committee               (e.g.,               communications               from               the               management               outlining               unadjusted               differences)               (Sarbanes-Oxley.com,               n.d.,               Section               204).

Also,               an               accounting               firm               is               prohibited               from               conducting               an               audit               of               a               public               company               if               there               is               clearly               a               conflict               of               interest               (Sarbanes-Oxley.com,               n.d.,               Section               206).
               Let               us               move               on               to               the               third               title               of               SOX,               which               addresses               specifically               the               responsibilities               of               the               corporation.

First,               every               corporation               is               required               to               set               up               audit               committees,               completely               independent               of               the               company.

These               committees               have               the               important               responsibility               of               overseeing               all               auditing               procedures               and               communications               between               the               public               accounting               firm               and               the               corporation's               management               (Sarbanes-Oxley.com,               n.d.,               Section               301).

Additionally,               all               principle               executive               and               financial               officers               must               certify               in               every               quarterly               or               annual               financial               report               such               things               as               (1)               that               they               believe               all               information               contained               within               the               report               is               true               and               accurate,               and               (2)               that               they               have               practiced               full               disclosure               with               the               auditor               and               audit               committees,               revealing               any               internal               control               problems,               irregularities,               or               fraud               (Sarbanes-Oxley.com,               n.d.,               Section               301).

Also,               Title               III               explains               that               it               is               illegal               for               anyone               to               try               to               improperly               influence               an               audit               (Sarbanes-Oxley.com,               n.d.,               Section               303).

Ultimately,               noncompliance               with               this               section               can               lead               to               forfeiture               of               bonuses/profits               or               other               penalties               (Sarbanes-Oxley.com,               n.d.,               Sections               303               &               306).
               Title               IV               of               SOX               explains               the               new               enhanced               financial               disclosures.

Section               401               discusses               the               necessary               disclosures               for               periodic               reports,               including               any               corrections/adjustments               found               by               a               public               auditor               and               any               relevant               off-balance               sheet               transactions               that               may               have               a               strong               bearing               on               the               business               or               its               future               (Sarbanes-Oxley.com,               n.d.).

Furthermore,               the               public               company               must               ensure               that               any               conflicts               of               interest               and               transactions               involving               the               business's               management               or               major               stockholders               are               clearly               disclosed               in               its               regular               reports               (Sarbanes-Oxley.com,               n.d.,               Sections               402               &               403).

Finally,               public               companies               are               now               required               to               disclose               their               code               of               ethics               (and               any               changes               made),               in               addition               to               periodic               evaluations               and               reports               of               their               internal               controls               (Sarbanes-Oxley.com,               n.d.,               Sections               404               &               406).
               Title               V,               in               contrast,               addresses               conflicts               of               interest               with               analysts.

This               title               calls               for               the               establishment               of               proper               rules               to               try               to               avoid               these               conflicts               in               the               future               (Sarbanes-Oxley.com,               n.d.).

For               example,               the               Commission               has               attempted               to               "to               establish               structural               and               institutional               safeguards               within               registered               brokers               or               dealers               to               assure               that               securities               analysts               are               separated               by               appropriate               informational               partitions               within               the               firm"               to               avoid               unnecessary               bias               (Sarbanes-Oxley.com,               n.d.,               Section               501c).
               Finally,               let               us               take               a               quick               look               at               the               last               six               titles               of               SOX.

Title               VI               outlines               the               Commission's               resources               and               authority,               while               Title               VII               discusses               the               studies               and               reports               that               the               Commission               is               required               to               oversee.

Titles               VIII,               IX,               and               XI               specifically               describe               the               different               penalties               for               violating               SOX               and               various               other               important               details               surrounding               the               prosecution               of               such               cases.

Finally,               Title               X               emphasizes               that               chief               executive               officers               must               sign               the               public               company's               income               tax               return               (Sarbanes-Oxley.com,               n.d.).
               In               conclusion,               the               Sarbanes-Oxley               Act               does               not               have               any               direct               control               over               small               businesses,               since               they               are               not               public               companies.

However,               this               does               not               mean               that               SOX               does               not               affect               them               at               all.

Instead,               in               the               years               since               SOX               was               enacted,               it               has               become               clear               that               this               act               may               be               negatively               affecting               the               growth               of               private               companies.

There               has               been               a               sharp               decrease               in               the               amount               of               funds               companies               have               been               able               to               earn               their               first               year               of               going               public               (Pethokoukis,               2006).

Some               financial               experts               suspect               that               "Sarbanes-Oxley               compliance               costs               are               so               high               that               some               private               companies               are               choosing               to               be               bought               out               rather               than               go               public               and               assume               that               financial               burden"               (Pethokoukis,               2006,               para.

3).

Consequently,               private               business               owners               must               spend               more               time               analyzing               whether               or               not               they               can               actually               afford               to               go               public.

Finally,               it               is               also               logical               to               assume               that               since               SOX               requires               public               companies               to               spend               more               time               verifying               their               financial               records               with               outside               accountants,               public               accounting               firms               will               be               much               busier,               making               it               harder               for               private               companies               to               receive               the               accounting               services               they               might               need.
               References:
               AboutSarbanesOxley.com.

(n.d.).

Highlights               of               the               Sarbanes               Oxley               Act.

Retrieved               May               29,               2008,               from               http://www.aboutsarbanesoxley.com/highlights.htm
               Pethokoukis,               J.

(2006,               April               17).

Sarbanes-Oxley               affects               small               businesses               wanting               to               go               public.

U.S.

News.

Retrieved               May               29,               2008,               from               http://images.usnews.com/usnews/biztech/articles/060417/17sbw.htm
               Sarbanes-Oxley.com.

(n.d.).

Sarbanes-Oxley               Act               of               2002.

Retrieved               May               30,               2008,               from               http://www.sarbanes-oxley.com/section.php?level=1&pub_id=Sarbanes-Oxley
               Wild,               J.

J.,               Larson,               K.

D.,               &               Chiapetta,               B.

(2007).

Fundamental               accounting               principles               (18th               edition).

Boston:               McGraw-Hill/Irwin.






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