A 2.5 page paper. The dramatic scandals involving auditors and accounting practices have left all finance but especially the accounting industry in the spotlight. New government mandates have been issued regarding accountants and auditors. This essay points out that unethical practices led to new regulations and, in turn, very nearly precludes innovations in this industry. Bibliography lists 4 sources.
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technicalities of financial management (Dobson, 1997). The recent scandals involving Salomon brothers, Enron, WorldCom, and Martha Stewart have further placed the ethics of financial business in the forefront of the
publics mind as well as in the consciousness of legislators and executives. People just dont trust executives of large corporations and they do not trust the auditors who are supposed
to ensure corporations are on the up-and-up. Dobson argues that the financial world must adopt and live by a code of ethics (1997). These and other events have brought the
entire accounting industry under scrutiny. On June 20, 2002, U.S. Securities and Exchange Commission Chairman Harvey L. Pitt stated: "The SEC and public investors rely on the competence, ethics, and
independence of accountants who certify those financial statements" (Pitt, 2002). Pitt noted that recent events have made it clear there are very definite deficiencies in the system that are used
to produce audits of corporate financial statements and these deficiencies have reduced the efficacy of the nations capital markets (Pitt, 2002). The fraudulent audits prepared by employees of one of
the nations auditing firms known for its honesty and integrity led to new government mandates for auditors and accountants. New government mandates are now in effect. These do not
leave any room for innovation in this industry, except to design ways in which to meet the new regulations. SAS 99 became effective on December 15, 2002 (Managing the General
Ledger, 2002). Adding to government mandates, the AICPA also issued new standards for audits for the express purpose of detecting any type of fraudulent reporting in the accounts (Managing the
General Ledger, 2002). One of the new provisions is for auditors to actually brainstorm ways in which fraud could occur (Managing the General Ledger, 2002). More tests will be designed