Response/commentary to an Article Review - Assignment Example

Response to review You have given a fair of the importance of financial accounting and the responsibility borne by each individual involved in accounting for the success of a company. While you have cited good examples of fraudulent financial reporting cases, adding reference for them would make it easier for the audience to trace them to their origin. The Sarbanes-Oxley Act of 2002 helps keep track of the financial accounting and accountability of the responsible. Being integrally related to and vested in accounting, accuracy of financial reporting is managed more by the accountants than the managers.

The management, on the other hand, needs to ensure that the organizational code of ethics and practices are consistent with the prevailing law. Another factor that makes financial accounting different from managerial accounting is the fact that while the former is mandatory, the latter is not because it is the free will of a company to do as much or little as it wants (Gillet, n.d.). A good strategy to make the accountants adopt rational approach to the job of accounting is to hire third-parties that do not have financial interests in the company.

One of the main points of the article, as you identified, is the ineffectiveness of the Sarbanes-Oxley Act of 2002 in providing suitable protecting against all sorts of frauds in the contemporary accounting practices. In order to standardize accounting practices and behaviors, it is imperative that a specific standard is developed against which the performance of the accountants can be evaluated. Use of a new electronic system by the Securities and Exchange Commission (SEC) would improve the accuracy and quantification of accounting quality.

Detection of anomalies by the Accounting Quality Model (AQM) would not only improve accountability in accounting but also provide fair means of comparison of performance among peers. Establishment of the Risk, Strategy, and Financial Innovation (RSFI) by the SEC is a big step forward in the way of integration of the financial economics into a variety of SEC activities including rule making, policy making, enforcement, and examination. It will take time for the SEC to implement AQM effectively because it is presently in the course of development.

Besides bureaucracy, the reason why it took so long for the SEC to use computer technology for the quality of accounting was that it takes time to transform the already existing system and also, the pace at which computer technology advances has become so fast that an organization needs to be proactive in its approach toward adapting to the changing technology (National Crime Prevention Council, 2014). Yours is a very good review in that it not only summarizes the original article adequately, but you have also shared the inferences and lessons that can be drawn from this article.

In addition, the observations you have listed suggest that you have critically analyzed the article as well which serves to improve the quality of your review. If SEC manages to accomplish the task of creating and implementing this program to its optimal tendency, it would surely revolutionize accountability system in financial accounting and would also integrate quality into every aspect of accounting. References:Gillet, P. W. (n.d.). Managerial Accounting Fundamentals. San Diego State University.

Retrieved from http://acct202.tripod.com/Chapter%201%20Outline.htm. National Crime Prevention Council. (2014). Evolving With Technology. Retrieved from http://www.ncpc.org/topics/fraud-and-identity-theft/evolving-with-technology.