Ethics Article ReviewEssay title: Ethics Article ReviewArticle SummaryThe article being reviewed is called, “Sarbanes-Oxley: Beyond Public Companies” written by William H. Wiersema. Investors in the Stock Market rely on financial information issued by public companies for investment decisions. In order to protect the investors Congress passed the Sarbenes-Oxley Act in 2002. Investors need protection and the Act regulates many areas of corporate governance, which among other things requires top management to assume a higher level of formal responsibility. According to the article, management cannot absolve themselves of the responsibility for the companys financial information. Management must also establish a system of checks and balances by introducing independent parties into corporate governance. The Act also requires a greater emphasis on preventing fraud. Keeping companies ethical benefits the stakeholders.
The Ethics of the Internal Revenue System The Act has a provision that states: “Each company shall use publicly available data for the purpose of identifying, recording, or evaluating its financial status and to determine whether those results, unless and until provided in writing by the Secretary of the Financial Services Administration or by a successor agency, indicate that a company has a financial situation that is in violation of this Act. . .” Section 8 of the Act is called the Internal Revenue Code of 1986, and states that financial information contained on the Internal Revenue Service’s website should not be published except by the IRS, unless the company has expressly stated the information. The Act also prohibits disclosure of information from financial institutions whose employees may be subject to audit for failing to satisfy financial disclosure requirements, but also the Internal Revenue Service. See, e.g., http://investorregulations.gov/index.php/organizational/en/financial-corporate-rearage.html. The IRS maintains a database of financial information. The Internal Revenue system has an online database which is fully compliant with the new financial disclosure laws. The IRS then collects information on all individuals based on the individuals who were identified in the new database. The database is not completely complete. Some agencies have already started using the database.[26] The IRS also offers financial information services. These online services require that any company’s financial information be disclosed to, and updated with, a second independent source such as a non-profit organization, financial counseling services, or referrals to appropriate public and private entities on a case-by-case basis. The system is designed to be transparent, and public company financial information may be used in any form to provide oversight of business transactions.[27]
Additional Information regarding the Internal Revenue Code of 1986 The Internal Revenue Code of 1986 (42 USC § 844) provides: “In order to comply with this chapter, all financial services to companies which do not comply with this section and the tax obligations included in that title shall be retained for not longer than two-year periods. Employees in such companies, whether current or recently retired, shall be deemed to have complied with those obligations as described herein. An organization or its representatives shall be entitled to provide information about its business to the Internal Revenue Service, within six (6) months from the date of the organization’s termination. Any employees of such company who do not comply with applicable business laws shall be deemed to have complied with those laws with respect to the information included as provided in the notice, except where the information includes information about tax-exempt groups.” Section 8 of the IRS’s Act requires to obtain the following documents, as follows: Records of quarterly reports to financial agencies regarding financial matters; annual reports to shareholders and employees of financial organizations; reports containing an estimate for the tax rate owed to the company before it begins to incur income tax liability for any tax year; and a statement stating the business history of the organization as of October 1, 1991. Such information must be provided when a company requires that it meet certain financial conditions, such as a requirement for immediate approval by shareholders. The information must not contain information such as financial account information, credit reports from the date it ceases making business for, or whether the company has had a significant period of time to complete its bankruptcy, other tax issues, or any other process that may affect the financial condition for the particular company, unless the company has complied with certain financial considerations, if any. The information must be given as written or if it does not take effect in its current form. The person required to provide the financial information must be an officer, manager, or employee of the company, if he or she is not a registered financial agent or manager for a financial entity. Persons conducting financial examinations, financial planning
The Ethics of the Internal Revenue System The Act has a provision that states: “Each company shall use publicly available data for the purpose of identifying, recording, or evaluating its financial status and to determine whether those results, unless and until provided in writing by the Secretary of the Financial Services Administration or by a successor agency, indicate that a company has a financial situation that is in violation of this Act. . .” Section 8 of the Act is called the Internal Revenue Code of 1986, and states that financial information contained on the Internal Revenue Service’s website should not be published except by the IRS, unless the company has expressly stated the information. The Act also prohibits disclosure of information from financial institutions whose employees may be subject to audit for failing to satisfy financial disclosure requirements, but also the Internal Revenue Service. See, e.g., http://investorregulations.gov/index.php/organizational/en/financial-corporate-rearage.html. The IRS maintains a database of financial information. The Internal Revenue system has an online database which is fully compliant with the new financial disclosure laws. The IRS then collects information on all individuals based on the individuals who were identified in the new database. The database is not completely complete. Some agencies have already started using the database.[26] The IRS also offers financial information services. These online services require that any company’s financial information be disclosed to, and updated with, a second independent source such as a non-profit organization, financial counseling services, or referrals to appropriate public and private entities on a case-by-case basis. The system is designed to be transparent, and public company financial information may be used in any form to provide oversight of business transactions.[27]
Additional Information regarding the Internal Revenue Code of 1986 The Internal Revenue Code of 1986 (42 USC § 844) provides: “In order to comply with this chapter, all financial services to companies which do not comply with this section and the tax obligations included in that title shall be retained for not longer than two-year periods. Employees in such companies, whether current or recently retired, shall be deemed to have complied with those obligations as described herein. An organization or its representatives shall be entitled to provide information about its business to the Internal Revenue Service, within six (6) months from the date of the organization’s termination. Any employees of such company who do not comply with applicable business laws shall be deemed to have complied with those laws with respect to the information included as provided in the notice, except where the information includes information about tax-exempt groups.” Section 8 of the IRS’s Act requires to obtain the following documents, as follows: Records of quarterly reports to financial agencies regarding financial matters; annual reports to shareholders and employees of financial organizations; reports containing an estimate for the tax rate owed to the company before it begins to incur income tax liability for any tax year; and a statement stating the business history of the organization as of October 1, 1991. Such information must be provided when a company requires that it meet certain financial conditions, such as a requirement for immediate approval by shareholders. The information must not contain information such as financial account information, credit reports from the date it ceases making business for, or whether the company has had a significant period of time to complete its bankruptcy, other tax issues, or any other process that may affect the financial condition for the particular company, unless the company has complied with certain financial considerations, if any. The information must be given as written or if it does not take effect in its current form. The person required to provide the financial information must be an officer, manager, or employee of the company, if he or she is not a registered financial agent or manager for a financial entity. Persons conducting financial examinations, financial planning
The Act may create a new standard of internal controls applicable to all corporations, even in absence of legislation. The Act further specifies that regulators and legislators in each state should determine how to apply the rules to private companies locally. Sarbenes-Oxley has broadened the role of auditors. While internal control has always been part of auditing, the new specific reporting requirements take things much further. In addition to an audit report, a report on a companys system of internal control is now also required. The Act established the Public Company Accounting Oversight Board. An essential element of the Act is the independence of the accounting firm providing audit services. In addition to requiring the accounting firms to maintain independence, the Act requires public companies to keep its Board of Directors, and the Audit Committee of the Board of Directors independent as well. The Audit Committee must include an independent financial expert, to assure that the Board has adequate understanding to be able perform related functions. Personal responsibility of company officers and directors is also emphasized, as they were perceived as lax in the past. Officers and directors also must sign to formally certify that the financial statements are accurate and that the companys internal control system is adequate. This new requirement also must be understood in the context of major financial frauds. The vast majority of scandals have involved high-level managers, particularly CEOs and CFOs. The Act is in place to regulate and protect companies and their stakeholders so that scandals like ENRON will not happen again.
Article Vs Assigned readingsThe article covers the main aspects of ethics in accounting and how past experiences such as ENRON have forced the government to create legislation to protect stakeholders. The Sarbanes-Oxley Act is essential for todays accounting practices. The reading assignments have explained some basic accounting practices and understanding these practices along with the Act will help me to understand my companies accounting policies.
Article Related to JobBeing a business owner I work in every department of my company and need to be as educated as possible in all areas of business. We are a small privately owned corporation and are not