Question

How would you define ethics? What are three factors that might affect good ethical conduct? Conduct research and provide an explanation of why the Sarbanes-Oxley Act was created and how it relates to ethics. What are the legal liabilities of an accountant?

Answer 1

Ethics : It means principles, values, code of conduct that are observed from person to person and which governs the fundamental behaviour of human being. It differs from person to person. What is considered as ethical for one person might be unethical for some other person. Ethics in general sense means that how a human being is taught to live his or her life, how they behave with other and what they do when no one is observing them. It tell us that what is good and what is bad, what is right and wrong. Honesty , responsibility , accountability, respect, good communication behaviour reflects some examples of ethical behaviour.
Three factors that might affect the good ethical conduct are :
1) Individual approach : Whether to behave ethically or not is a person own call. He or she will behave as per the situation, there personal thinking.
2) Conflict of interest means personal and public interest. A person need to differentiate between personal and Public interest base on there ethics
3) Opportunities : When a person have opportunity to do fraud but it depend on his or her ethical behaviour

Sarbanes Oxley Act 2002 is created to stop the corporate world fraud. It is there to protect the whistleblowers,investors , to bring transparency in the entities , to strengthens the independence and financial position of the corporates. There are set of rules and regulation set by the board. The law was made specifically for Public listed company but it grabs the non profit making entitles also
It is mainly to protects the shareholder interest, employees and public from the fraudulent financial activity. Due to big fraud of Enron Corp. public , employees and investor loss the trust as there were many fraudulent activity was conducted by the firm. They conducted the fraudulent financial activity due to the unethical behaviour of management and due to there personal benefit.
The legal liabilities of accountant are :
1) Now the companies auditor will required to study the internal control system , risk assessment process of company along with the financial data and figures
2) Also the auditor is required to give audit report on internal financial control system of the company
3) The auditor of the company should not be related to the companies top management
4) Auditor is bound to perform his duty as per the engagement letter and as per the set of principles , rules and regulation set by accounting bodies