THE SARBANES-OXLEY WEBLOG

PHASE II -- QUESTION 9

2005-09-20T02:37:00.000-07:00

Do you think the Sarbanes-Oxley Act of 2002 will effectively enhance the accuracy, reliability, and integrity of the financial statements of public companies?

PHASE II -- QUESTION 8

2005-09-20T02:36:00.000-07:00

GAAP allows managers flexibility and discretion in reporting the corporation’s financial performance. Why do/did some managers engage in fraud?

PHASE II -- QUESTION 7

2005-09-20T02:35:00.000-07:00

How does the Sarbanes-Oxley Act encourage the CEO and CFO to issue reliable and truthful financial reports?

PHASE II -- QUESTION 6

2005-09-20T02:33:00.000-07:00

Coffee (2004) explains away the roles of attorneys and executive managers in financial irregularities and corporate scandals. On page 279, Coffee excuses attorneys from the role of true gatekeepers. Why? Do you agree with Coffee? Why or why not? How does SOX prescribe the future role of attorneys in the financial reporting process?

PHASE II -- QUESTION 5

2005-09-20T02:31:00.000-07:00

According to Coffee (2004), the gatekeepers have failed shareholders. Who are the gatekeepers? Do you agree or disagree with his arguments? Why or why not?

PHASE II -- QUESTION 4

2005-09-20T02:30:00.000-07:00

How does SOX address the problems, issues, and/or deficiencies that were facing the Board of Directors?

PHASE II -- QUESTION 3

2005-09-20T02:28:00.000-07:00

Through the Sarbanes-Oxley Act, Congress addressed certain problems, issues, and deficiencies that were facing the managers in the financial reporting process.

a. Prior to SOX, what problems, issues, or deficiencies were facing the managers? (Bloggers, tackle one per comment.)

b. Post Sox, how does the Sarbanes-Oxley Act of 2002 resolve or reduce the problems, issues, or deficiencies noted above in part a?

PHASE II -- QUESTION 2

2005-09-20T02:26:00.000-07:00

Through the Sarbanes-Oxley Act, Congress addressed certain problems, issues, and deficiencies that were facing the internal auditors.

a. Prior to SOX, what problems, issues, or deficiencies were facing the internal auditors? (Bloggers, tackle one per comment.).

b. Post Sox, how does the Sarbanes-Oxley Act of 2002 eradicate or decrease the problems, issues, or deficiencies noted above in part a?

PHASE II -- QUESTION 1

2005-09-20T02:19:00.000-07:00

Through the Sarbanes-Oxley Act, Congress addressed certain problems, issues, and deficiencies that were facing the external auditors.

a. Prior to SOX, what problems, issues, or deficiencies were facing the external auditors? (Bloggers, tackle one per comment.)

b. Post Sox, how does the Sarbanes-Oxley Act of 2002 fix or minimize the problems, issues, or deficiencies noted above in part a?

More on the SEC

2005-09-12T18:04:00.000-07:00

Bloggers have provided us with the basic mission statement of the SEC. Do you think the SEC is effective in its primary mission to protect investors and maintain the integrity of the securities market?

If yes, then tell us a few details about a firm or an issue illustrating how the SEC is effective?

If no, then tell us a few details about a firm or an issue illustrating how or why the SEC is ineffective?

Break it down

2005-09-08T18:56:00.000-07:00

Good start. The SEC investigated Adelphia for financial fraud. Does the excluded bank debt (as mentioned earlier) explain every single stock price decrease and increase for Adelphia between mid-1999 and 2001? Look a little deeper. Just take one peak or one valley per comment at a time.

2005-09-08T18:49:00.000-07:00

As you may have noticed, a question is nested with several questions. A single comment does not have to address every single nest within the question. Take an aspect of that question and comment on it. For example, all of question number one does not have to be addressed by a single student. You can pick a single qualitative characteristic and discuss, critique, or explain it more fully, and possibly cite other references.

Do not copy from your book or reference word for word, but read and express yourself using your own words.

PHASE I -- QUESTION 6

2005-09-06T11:40:00.000-07:00

The chart below shows the historical stock price of three companies over time. The corporate performance is compared to the Dow Jones industry average and to the S&P 500 Index. You can obtain this information at http://moneycentral.msn.com/investor/home.asp for almost any company that is currently trading stock in the securities market. In this example, I randomly picked three companies, including Adelphia Communications Corporation. Notice its stock performance during 1999. You should be able to find news reports about Adelphia around November 2000 and January 2002. What happened? Notice that the stock price for McDonalds Corporation also dipped around January 2003. What news event(s) caused stock prices for McDonalds and Costco to drop around January 2003? Do you think executives are concerned about the changes in stock price? Why or why not?

PHASE I -- QUESTION 5

2005-09-06T11:25:00.000-07:00

What is reputation capital? How important do you think reputation capital really is? Why and for whom?

PHASE I -- QUESTION 4

2005-09-06T11:20:00.000-07:00

Next, we will investigate and discuss who the regulators are as well as their authoritative role in the accounting profession. What are the missions, goals and roles of the Securities and Exchange Commission (SEC), Public Companies Accounting Oversight Board (PCAOB), and the Financial Accounting Standards Board (FASB)? Discuss how the missions, goals and roles of the SEC, PCAOB, and FASB are similar and different among each other.

PHASE I -- QUESTION 3

2005-09-06T11:15:00.000-07:00

What is the role of the Board of Directors?

PHASE I -- QUESTION 2

2005-09-06T11:05:00.000-07:00

Accountants take on specific titles and therefore, their roles differ. For example, the role of internal auditors and external auditors are similar in some respects and different in other respects. How do the roles of the accountants, internal auditors, and external auditors differ from each other? How are they similar?

PHASE I -- QUESTION 1

2005-09-06T11:00:00.000-07:00

For accounting information to be useful, it must possess certain qualitative characteristics. Read Statement of Financial Concepts Number 2 (SFAC No. 2) and The Numbers Game speech by former SEC Chairman, Arthur Levitt (1998). Discover what they are. Choose a single qualitative characteristic and tell us about it. How does it relate to the corporate scandals? How does it relate to the other qualitative characteristics? Is it more or less important than the other qualitative characteristics? How? Why? To you other bloggers, do you agree? Disagree? Is there something else to add or point out? Do not forget to refer us to your links/references.

PHASE I -- READINGS

2005-09-06T09:30:00.000-07:00

To begin the accounting project, first read the following two articles to answer the questions in Phase I.

The Numbers Game Speech by Arthur Levitt (1998)

Statement of Financial Concepts No. 2 (SFAC No. 2)

TIME FRAME

2005-09-06T09:00:00.000-07:00

PHASE I
Students are expected to actively post comments/questions/links to the SOX Blog from September 6 through September 20 during the Fall 2005 semester.

PHASE II
Students are expected to actively post comments/questions/links to the SOX Blog from September 20 through October 7 during the Fall 2005 semester.

WELCOME MESSAGE FROM DR. SCOTT

2005-09-06T08:00:00.001-07:00

Welcome to The Sarbanes-Oxley Blog Project for ACCT 207 – Introduction to Financial Accounting. The Sarbanes-Oxley (SOX) Blog integrates accounting education, technology, and advice from experts. The exposure of corporate accounting scandals and related financial irregularities by Enron, WorldCom and other large Fortune 500 firms occurred during 2001 and 2002. In response, the President signed the Sarbanes-Oxley Act of 2002 into law on July 30, 2002. SOX applies to publicly held companies and to the respective audit firms that provide their client with assurance services. By now, most of us have heard of The Sarbanes-Oxley Act (SOX) but probably have not read it. Well, for this Project you will become familiar with one of the most important pieces of legislation for accountants, auditors, Board of Directors, CFOs and CEOs.

The SOX Blog is designed to enhance the understanding of accounting, its usefulness, and its environment. Many students are new to the language of business, i.e., accounting.

The SOX Blog will help you learn accounting terminology and provide a framework in which to evaluate the usefulness of accounting information. In addition, we have experts with many years of professional accounting managerial experience that will add comments and interject questions. Students are expected to think about and respond to comments and questions interjected by these experts.The SOX Blog provides students the opportunity to gain knowledge and technical skills to succeed in the business and social community. This blog should invoke deep thought and critical thinking. It is possible that three different people can take three different viewpoints on a single article. So provide us with your references/links so others can read it too. Here’s a link to the blogging rules and the grading policy.

The ACCT 207 SOX Blog Project consists of two phases: Phase I and Phase II. Different sets of questions are posted in each Phase. Phase I is designed for students to develop an understanding of the accounting environment and an appreciation for high quality financial reporting. Phase II highlights ethical issues within the accounting environment. Students will explore the issues and concerns surrounding SOX and contemplate various reasons why the concentration of financial scandals occurred at this moment in time.