The Accounting Profession - Essay Example

 The accounting profession relies on the ethical behavior of its members to ensure the reliability and accuracy of accounting information. During the early part of the 21st century there were a series of accounting scandals that devastated the financial world as people began to lose confidence in the financial information provided by public companies. Two of the big scandals that led to the lack of confidence of people in the work of accountants were the WorldCom and Enron debacles. The Enron case at the time represented the biggest bankruptcy in U.S history. The executives of Enron cooked up the books and stole millions of dollars for their personal wealth.

Due to the uncertainty and sudden lack of confidence by investors in the marketplace the government reacted and passed the Sarbanes-Oxley Act (SOX) of 2002. The Sarbanes-Oxley Act was created by Senator Paul Sarbanes and Representative Michael Oxley. The purpose of the Act was to regulate the accounting profession to ensure the validity of information, while at the same time raising investor confidence in the marketplace. The Sarbanes-Oxley Act is composed of 11 titles with the six most important titles being sections 302, 401, 404, 409, 802, 906 (Soxlaw, 2003).

SOX brought major changes to the accounting profession. Public companies now had to implement managerial assessments of internal controls that must be published within the annual report. Another major breakthrough of SOX was that it raised the accountability of the executive management team. The top executives of companies including the CEO were forced to sign the financial statements of companies to ensure they are free of material error or fraud. Both the accountants and the top executives now face criminal penalties of up to 25 years in prison time if found guilty of financial fraud.

The act also forced accountants to provide enhanced financial disclosure in regards to off-balance sheet liabilities, obligations, or transactions. Accounting is mostly self regulated, thus the ethical conduct of the members of the profession is imperative for the effectiveness of the work of accountants. All accountants in the United States rely on the generally accepted accounting principles (GAAP) to guide their work. It is mandatory for accountants to fully comply with GAAP. The generally accepted accounting principles must be used by accountants in the preparation of financial statements (Marianne, 2009).

The managers of companies rely on the accounting department to provide them with accurate financial information and business consultancy. As a future accountant I realize that business ethics are imperative towards my personal success in the profession. One of the most important steps that I must take in my journey towards becoming an accountant is to have full knowledge of the generally accepted accounting principles. Attempting the CPA exam is a great way for me to sharpen my skills in accounting due to the fact that studying for this exam requires hundreds of hours of study time in accounting subjects.

The third section of the CPA exam includes material related to ethical and legal responsibilities (Ais-cpa, 2011). As an accountant my ethical philosophy is based on serving the needs on the clients, while at all times complying with the generally accepted accounting principles. For me honesty and trust are important qualities that I will use in my interaction with clients or other accountants working in an accounting department. Accountants must focus on proper ethical conduct because the general public expects accountants to uphold the highest ethical conduct.

It is also important to remember that regulations such as the Sarbanes Oxley Act impose severe penalties for accountants that collude to commit fraud. The accounting profession is a great career that provides great rewards for its members such as stable employment, good financial compensation, and the ability to help solve the economic problems of people or business entities. Proper business ethics are required by accountants due to the fact that accountants work with the financial wealth of business entities and individuals.

A bond of trust must be established between the accountant and the client. Proper ethical conduct is the best way to ensure that the financial information prepared by accountants is free of financial manipulation or fraud. An accountant that acts unethically will not succeed in the long term. Ethical conduct is a critical success factor for the accounting profession. During the past decade regulations such as the Sarbanes-Oxley Act have been passed that have raised the level of accountability of accountants.

To become a good accountant I must follow a rigorous professional code of ethical conduct in all personal and professional affairs. ReferencesAis-cpa.com (2011). CPA Exam Dates & Structures. Retrieved February 12, 2012 from http://www.ais-cpa.com/dates.html#EXAM Marianne, J. (2009). Accounting for Global Entities and the Effect of the Convergence of U.S. Generally Accepted Accounting Principles to International Financial Reporting Standards. Journal of International Accounting Case Studies, 15(6). p27-36. Retrieved February 12, 2012 from EBSCOhost database.Soxlaw.com (2003).

Introduction. Retrieved February 12, 2012 from http://www.soxlaw.com/introduction.htm