Financial Statements and Public Essay

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Financial Reporting and Analysis

Accounting Quality

The Sarbanes-Oxley (SOX) Act was created with the intent of improving the quality of accounting, reliability of financial statements to investors, and providing oversight to accounting professionals through the creation of a new federal agency, Public Accounting Company Oversight Board (PACOB). Create an argument supporting whether SOX achieved these goals, and whether financial data reported today is more accurate and reliable than prior to the Act. Provide support for your rationale

SOX has been successful, and is comprehensively credited for firming up different areas. One of these areas encompasses CFO and CEO responsibility and accountability regarding all financial disclosures and associated controls. A second aspect encompasses increased competence and commitment on the part of corporate audit committees. Overall, SOX has been quite effective and successful in increasing focus and emphasis on a strong ethical organizational culture in companies (Verschoor, 2012). One of the positive impacts of the SOX Act is that it caused a decline in the number of financial restatements done by companies. In addition, the Act has also brought about a major decrease for class actions filed in terms of securities in the past few years, which implies companies have taken much caution (Harwood and Simmons, 2012). In addition, the Sarbanes-Oxley Act is deemed as a representation of success and accomplishment when bearing in mind the benefits that go along with compliance.

Assess the impact to the Public Accounting Profession with the creation of the PCAOB and the inability of the profession to be self-regulated. Indicate your level of support for the federal regulation of the profession. Provide a rationale for your response

The Public Company Accounting Oversight Board (PCAOB) was constituted to oversee the audits of public corporations' conformance to the Sarbanes-Oxley Act (SOX). PCAOB was formed so as to safeguard not only the investors but also the general public to not only have accurate but also independent audits (PCAOB, 2016). I have a great deal of support for the federal regulation of the profession as it has led to a significant decline in financial scandals. The PCAOB has had a positive impact on the profession. In particular, the PCAOB has issued several general reports, practice strictures for staff as well as other public documentation that shed light on a variety of outcomes that come about in the course of inspections of public companies.

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In response to these aspects, different regulators have taken enforcement actions with respect to the violation of these particular standards and associated laws and regulations (Franzel, 2014).

Restated Financial Data

Assess the impact to public trust when a publicly traded company restates its financial data, indicating how negative impressions may be minimized. Provide support for your rationale

When a company resorts to repeated financial restatements, it has an adverse impact on public trust; the public consider such actions to be a form of cover up or malicious actions. Various actions can be undertaken to minimize negative impressions. One element is providing statements that substantiate the nature of the issue, offering clarifications to analysts and aids better reception by the public. Another action is communicating openly right from the start. This offers more information and gives rise to the consumers assuming that the problems are less prevalent. Another action is for the executive managers to take blame as the lack thereof is bound to erode public trust even further. A company also ought to take corporate governance measures. In particular, the firm should demonstrate not just its dedication to corporate governance but also its capacity to take fitting and suitable measures is vital. This is because such measures curtail fears that the company will operate with malevolent intent henceforth. In addition, diligently abiding by policies and regulations subsequent to the need for a restatement facilitates a company in rebuilding trust, seemingly for the reason that the market yet again becomes more confident that future occurrences of spiteful intent will be avoided (Walker, 2009).

Evaluate the current trend of companies restating financial statements. Indicate the key drivers of this trend. Predict the trend over the next five years, providing support for your rationale

The current trend of companies in restating their financial statements is to make certain that the published and reported financial data and information are in tandem and adhere with the rules and recommendations and standards set by the PCAOB. Recommendations given by the audit committee with respect to regulations set causes the prevailing trend of companies restating financial statements. My prediction of the trend over the next five years is that there will be less financial restatements because the companies will already be aware of the regulations and rules and implemented by the PCAOB (PCAOB, 2016).

Forecasting

Assess the financial performance.....

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