Ethics In Accounting

Ethics in Accounting

UOP

Financial Analysis for Managers I

431

Jun 20, 2007

Ethics in Accounting

Ethics and accounting are not always good partners. So many people in positions of power are tempted to cheat; and they do, often. From Enron to Global Crossing, there is no shortage of five finger discounts and dishonesty in the corporate world. Even a company like Bristol Meyers Squibb can be affected by this type of corporate cancer. Bristol Meyers Squibb is just now being released from its probation obligations for exaggerating, by a factor of 2 billion, dollars for fiscal years 2000 and 2001 (Reuters, 2007, pp.1).

How does it relate to the Reading?

As described in chapter six of the weekly reading, the Bristol Meyers accounting situation meets the criteria for fraud. This was not a small miscalculation; ultimately it cost four cozy well paid executives their jobs. Certainly the posted numbers were fraudulently fudged to increase the money the company could generate by doing business with its wholesalers.

2002 Sarbanes-Oxley Act

Ethics are critical to any company. Public perception often looms on how a company does its business. When companies like Enron and Global crossing defraud their employees and the public, it creates and outcry that was finally answered in the way of the 2002 Sarbanes-Oxley Act. This act created strict new rules and new accountability in an effort to prevent companies to be dishonest with their stock holders and the public. There are now consequences for fudging the numbers. Unfortunately,