Question

"Accounting Valuation and Ethics" Please respond to the following: As a CFO of a publically traded company, suggest how you would create an ethical environment to ensure account balances are correctly valued and reported so that information is reliable for users. Provide support for your rationale. Assess the ethical requirements as outlined in the Sarbanes-Oxley Act, indicating whether or not you believe the requirements are adequate to ensure integrity in financial accounting and reporting activities. Suggest improvements that may be needed while providing support for your rationale.

Answer 1

First of all, ethics and the importance of ethical decision making have taken on increasing significance because of the pressures placed on business managers by stockholders, creditors, and other parties affected by financial performance. The concern of fraudulent activities is significantly high particularly in personal trading, insider trading, and especially in financial statement reporting. Therefore I would suggest “internal control and tone at the top” would be necessary to promote in a public traded company. Tone at the Top” defines as management’s leadership and commitment towards openness, honesty, integrity, and ethical behavior. It is the most important component of the control environment.