Question

Case:

Questions: 1. How does the Securities and Exchange Commission assist in preventing fraud? 2. You are a manager in the sales department of a company and you are anticipating a promotion to vice president of sales if your division maintains good performance. You received the sales budget for the company and realized that top management has set revenue targets for your division that are realistically unreachable. What actions would you take to satisfy management’s expectations and still maintain your integrity? Demonstrate through the use/preparation of actual sales budgets. Compare and contrast. Identify management’s goals and your recommendations.

Answer 1

1. Securities and Exchange Commission (SEC) is considered as the watchdog of corporate America and it helps in preventing fraud by creating as well as enforcing laws that assist in preventing fraud. One of the key requirements of SEC is that all publicly traded companies have to submit all their reports to SEC for the purpose of review. The notion that they will be reviewed every year deters majority of the companies from committing any kind of fraud.

SEC formulates and enforces laws and principles that are based on a simple tenet. The tenet is that all investors, irrespective of their financial standing and size, have the right to access the basic facts about an investment before putting their money in it. To ensure that this right of the investors are fulfilled SEC requires that all public companies have to disclose meaningful financial and other information to the public. This enables investors to prudently judge an investment opportunity on the basis of the accurate, timely and comprehensive information that is available to them.

SEC, in order to prevent fraud, also works with other institutions like federal departments and agencies, state securities regulators etc.