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Eco 372 Economic Critique

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Unethical Behavior Article Analysis
Selene H. Peng
ACC/291 Principle Accounting
April 02, 2013
Sang Kim

Unethical Behavior Article Analysis
For profits is always the target that any organizations to persuade. This intension might attract some business organizations to produce a creative accounting financial statement to inspire investors investing their funds to the organizations. “Businesses feel the pressure to appear profitable in order to attract investors and resources, but deceptive or fraudulent accounting practices often lead to drastic consequences” (Krantz, 2002, para. 1).
In the early 2000s, Congress passed the Sarbanes-Oxley Act of 2002 (SOX) due to the numerous corporate scandals explosions, Enron Corporation was one of the most notable companies to crash. Basically, in 1990s Enron and numbers of publicly-traded companies increase their stock prices by deceptive and publishing false financial statements. In addition, the directors of Enron waived the corporation’s code of ethics in 1999; this action allowed the CFO at that time to manage an investment partnership trading with Enron for illegal profits. By conducting the overstatement of revenue and equity of shareholders; understatement of expenses and liabilities on the financial statements, Enron was committed to the financial fraud. Moreover, Enron was alleged in the events of bribes and kickbacks were being issued from its executives. Hence, SOX was established to safeguard and protect the investors. The SOX is mandatory regulations of financial practice and corporate governance that all sizes of the U.S. Corporations must comply.
Under SOX, all U.S. corporations publically traded in stock exchange market are required to maintain an adequate system of internal control, executive and boards of directors must ensure the internal controls are effective and reliable. The SOX also…...

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