Part #1 Q1. Sarbanes Oxley is an added cost to any organization which has to com
ID: 2353572 • Letter: P
Question
Part #1Q1. Sarbanes Oxley is an added cost to any organization which has to comply with the regulation, yet gives investors more confidence in financial details. Compare the costs to the benefits to determine whether you are for or against this legislation. State your reasons with your answer.
Part #2
Q1. Assume that you work as an accounting manager and notice that the number of bad debt has increased significantly over the past year. Discuss what factors might be yielding this result and how you would address the problem.
Q2. Pick any business and with this specific business in mind, discuss some possible “early warning signs” to indicate that this business needs to review its bad debt holdings.
Explanation / Answer
Sarbanes-Oxley requires companies to maintain effective internal controls over the recording of transactions and the preparation of financial statements. These controls are important as they act as the check and balance to deter fraud and prevent misleading financial statements. The cost of institute things such as controlled environments, risk assessment, control procedures, monitoring of employee communication activities are far more defend-able than a business as usual mind set for justifying the cost to institute these measures. You don't have to look any further than Enron, Tyco and WorldCom to understand the devastation caused by major corporations going unchecked and the havoc that followed in the wake of their collapses. Business must implement controls to help guide the behavior of their managers, employees and customers to be successful and not place their corporations at risk.