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Business Law and the Accounting Profession - Research Paper Example

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Business is used as an instrument to accomplish one's vision. Its huge impact on the society may bring a positive or negative effect depending on how the individual practices it…
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Business Law and the Accounting Profession
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Download file to see previous pages It governs all transactions in the land including business. Law is often associated with ethics. Ethics is the field of study that aims to encourage all people to act in accordance with the law. It focuses more on one's morality, the ability to decide in a rightful manner taking into consideration any possible consequences of the decision. It is crucial for law and ethics to unite, but unfortunately at times it is not the case. Sometimes an individual must consider doing an unlawful act to do something that is ethical, it sounds complicated, but it happens in reality especially in handling business transactions (Beatty and Samuelson 16). The day to day dilemmas in business led to the formulation of business laws that seek to promote the value of law and ethics in the globally progressing business environment. Sources of Business Law In spite of the existence of business laws there are still some professionals who opt to perform their duties through unethical means. Perhaps this wrongful act has contributed to the growing disbelief of people towards the information that is being shown in financial statements. The violation could either be intentional, that is when the accountant voluntarily made the violation or unintentional, if there is no willingness to do the wrongful act (e.g., when the employer threatens an employee to do something unethical for the sake of the company). Accounting regulations were established to govern professional accountants into practicing ethical behavior. The Securities and Exchange Commission (SEC) is the government agency tasked to promulgate regulations that are set to be followed by organizations particularly the accountants who are most of the time susceptible to trouble. The Securities Exchange Act of 1934 made possible the creation of SEC to formulate and impose securities law. In 2002 former U.S. President George W. Bush passed the Sarbanes-Oxley Act or the Public Accounting Reform and Investor Protection Act. The law was established to ensure the credibility of financial statements. Due to the increasing number of fraud related issues in companies, the government finally realized the need to reform the laws that govern organizations and protect the right of investors (Peck 11). Issues in the Accounting Profession There have been recent scandals that involved accounting professionals. This type of profession is never easy to handle and sometimes it places an accountant's reputation at stake. In most cases, the cause of complications in the accounting profession is in the making of financial statements. Financial statement misrepresentation is strictly prohibited. Although that rule is clearly emphasized, many seem to disregard it. The violation is avoidable if companies will consciously make an effort to adhere to the said policy. If unluckily an accountant is caught doing this wrongful act, then there is no possible way to get out of this mess. Whatever the case may be, an accountant will still be held liable because an offense has been committed and the harm has already been done. As in the case of a criminal act a suspect is convicted if the commission of a crime is proven beyond reasonable doubt, so a suspect is not yet considered a criminal unless there is enough evidence. Say for example a company that is struggling financially. The only way to solve the problem is to manipulate the figures in the financial report so that investors will remain faithful to the company. The accountant is left with no other choice, but to do what the employer says. There are two possible consequences to this act. The first consequence is that if the manipulation will push through there are chances of reviving the company and so ...Download file to see next pagesRead More
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