Question

Discuss how these regulations have impacted that organization and its participants. Discuss how improvements may be added to these laws. (Examples include the 1933 and 1934 Securities Acts, 1940 Investment Company Act, 1999 GLBA, and the 2002 Sarbanes-Oxley act.)

Answer 1

Principles

1. Under US GAAP the measurement of carrying value of goods is considered based on the actual cost or market value whichever is lower.

2.Asset retirement obligation (ARO) that is created during the production of inventory is added to the carrying value of fixed assets such as property, plant, and equipment that are used to produce the inventory.

3.Valuation methods of inventory under US GAAP includes FIFO (First-In-First-Out), LIFO (Last-In-First-Out) and Weighted-Average method.

Sarbanes‐Oxley Act was regulated in 2002 to prevent the fraudulent activities conducted by corporates while disclosing their financials to the investors. The act followed the strict guidance to mandate the reforms made to the accounting activities. There are many accounting scandals have happed in the past such as Waldron, Enron and Tyco, which have reduce the investors’ confidence to rely on the companies’ financial statements.

The act is certainly in favour of investors, as it is meant to protect them from misleading accounting statements. The section above impose the strict rules against any discrepancy in the internal control, which the organization undertakes by hiring internal auditors. In fact, any fraudulent activities that have been conducted knowingly and unknowingly by any authorised person will impose a penalty or up to 20-year of imprisonment.

PLEASE GIVE UPVOTE RATING