Essay on Finance and Internal Control
Week 2 Homework
1. In two to three paragraphs, describe the Sarbanes-Oxley Act and why it is important to the accounting profession. (15 points)
The Sarbanes-Oxley Act was passed in 2002 by Congress after a series of scandals involving companies such as Enron, WorldCom, and Tyco. This was passed because of shady transactions and misrepresented financial data which caused shareholders to lose millions of dollars and their trust in investing in public companies. It was passed to create new rules of accountability and accuracy for public companies.
It is important to the account profession because companies were required to have met certain conditions or face the consequences. The Act requires all public companies to …show more content…
The fraud triangle consists of Opportunity, Pressure, and Rationalization. Tom Jackson has all three of these traits when it comes to his gambling issue.
Rationalization: Tom feels that what he’s doing isn’t wrong and that it’s okay for him to gamble because he feels that it’s the same way he would use his accounting skills when trying to buy stocks. He has the information, the knowledge, and the facts needed in order to invest his money into something that’s essentially bad because his profession disapproves of his gambling habits. How he studies each stock he invests in, he also does the same with his gambling habit. He feels that he is making educated decisions based on what facts he knows, just like he would when it comes to his profession.
Opportunity: Because he is an accountant and his savvy with numbers he feels that he could use his skills into something else in order to make a personal gain, essentially gaining more money into his pocket. Since he had learned how to win at poker, gaining knowledge in sports facts, and learning how to gamble as a whole he has the opportunity to place a bet on different subjects. Since no one has confronted him about his gambling habits and is unaware of his actions, he feels that he’s able