Accounting Scandals

Now that we have discussed the similarities of WorldCom to other accounting scandals, let us further expand the discussion. In 2002, President George W. Bush signed the Sarbanes-Oxley Act into law to re-establish investor confidence in the integrity of corporate disclosures and financial reporting. The act was brought on by the large number of corporate financial fraud cases (such as those of Enron, WorldCom, Tyco, Adelphia, AOL, and others) and by the end of the “boom” years for the stock market. The act requires all public companies to submit both quarterly and annual assessments of the effectiveness of their internal financial auditing controls to the Securities and Exchange Commission. Please discuss and answer the following questions: 1.Do you think the implementation of this act has been an effective preventative measure?  2.Some argue this act has added a lot of extra work and costs to public companies. Do you agree or disagree?  3. What other actions could be taken to prevent further scandals?