Today the former Chief Executive of WorldCom, Bernard Ebbers, was found guilty of securities fraud involving billions of dollars.
New York Times reporter Ken Belson suggested in his report of Ebbers' trial that jurors, as well as the American public as a whole, are suspicious of CEOs and, as a result, are not inclined to give them the benefit of the doubt in cases where the evidence against them is thin, as it appeared to be in the Ebbers' case.
The cumulative effect of such scandals on the accounting profession is unclear. What is clear, however, is that such questionable behavior at the highest levels of corporate leadership have already begun to lead to greater regulation of corporate governance.
Much of that regulation has stemmed from the Sarbanes-Oxley Act, legislation that in 2002 established standards and rules relating to corporate governance and reporting. Sarbanes-Oxley is intended to protect investors and to restore their confidence on the heels of several large corporate accounting scandals.
What does this mean for accountants, auditors, and others involved in the monitoring and reporting of a company's financial activities? In part, it means learning how to comply with the new standards, which according to PriceWaterhouseCoopers, are the "gold standard" in the corporate world.
The passage of the Sarbanes-Oxley Act has spawned a slew of consultants to provide advice and support to companies trying to comply with the new legislation. Companies are spending millions of dollars to develop processes and systems to ensure compliance with the Act.
But the real question remains clear; will this legislation effectively restore confidence among investors, as well as the American public, in corporate accounting practices?
# posted by Sarah Clark @ 4:35 PM
