Expert answer:Accounting Essay for movie “The Smartest Guys in
Answer & Explanation:Enron assignment.docxSOX Summary.docxAICPA code of conduct.pdfPlease read the requirement carefully. Write a
2-5 page, double spaced paper, 11 point font, normal margins, that explains how
Enron and its auditors violated the Code of Conduct and influenced SOX. Thank you.
enron_assignment.docx
sox_summary.docx
aicpa_code_of_conduct.pdf
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The movie “The Smartest Guys in the Room”
Enron’s impact on the accounting profession, along with the several other wellknown frauds that were uncovered around the same time, was huge. Shockwaves
were felt across the country, across Wall Street and across our profession. The
results of the frauds and their subsequent investigations can still be felt in public
practice. The Sarbanes Oxley Act was a direct answer to the questions raised by
the public regarding the accounting professions. CPAs were once considered more
ethical than priests, but after the fraud era, we were at the bottom of the list of
ethical professions. When you think about the purpose of our work, you know that
could not last.
As we watch today’s movie, “The Smartest Guys in the Room”, pick out some of
the violations of the AICPA Code of Conduct. Also, look over the Sarbanes-Oxley
Act and see if you can find some of the sections that were a result of Enron and the
other large scandals of the time.
Please submit a 2-5 page, double spaced paper, 11 point font, normal margins, that
explains how Enron and its auditors violated the Code of Conduct and influenced
SOX. This doesn’t need to be a research paper; I don’t expect you to spend hours
in the library. You should have everything you need with the materials provided to
you and the information from the movie to answer the questions and give me your
opinion. While this is not a formal research paper, I do expect you to think
critically and write seriously on the topic, using correct grammar, punctuation and
spelling.
Keep the following questions in mind:
Is the Code of Conduct reasonable in its expectations?
Does it preserve the integrity of the profession?
How was SOX designed to keep another major fraud from happening?
What do you think about the major players, the actions they took and their ultimate
fates?
Who are the major players and where are they now?
How did corporate culture, at both Enron and Arthur Andersen, contribute to the
results of their professional relationship?
Is corporate culture important today?
How does it impact your own search for your entry into the profession?
You are not required to answer each of these questions, but use them to guide your
writing. Let me know if you have any questions.
For those of you who did not watch the movie with us, you will need to do a bit
more research on your own to be able to answer the questions, or watch the movie
on your own. I highly recommend it as some quality family entertainment on a
Friday evening, although if you have small children at home, you may want to
exclude them from the activity! It is an R rated movie.
The Sarbanes-Oxley Act
The Sarbanes-Oxley Act of 2002 is mandatory. ALL organizations, large and small, MUST comply.
This website is intended to assist and guide. It provides information, and identifies resources, to help
ensure successful audit, and management. Whether you are entirely new to the Sarbanes-Oxley
legislation, or whether you have an established strategy, this portal should hopefully prove to be of
substantial value
Introduction
The legislation came into force in 2002 and introduced major changes to the regulation of financial
practice and corporate governance. Named after Senator Paul Sarbanes and Representative Michael
Oxley, who were its main architects, it also set a number of deadlines for compliance.
The Sarbanes-Oxley Act is arranged into eleven titles. As far as compliance is concerned, the most
important sections within these are often considered to be 302, 401, 404, 409, 802 and 906.
An over-arching public company accounting board was also established by the act, which was introduced
amidst a host of publicity.
Sarbanes-Oxley Compliance
Compliance with the legislation need not be a daunting task. Like every other regulatory requirement, it
should be addressed methodically, via proper analysis and study.
Also like other regulatory requirements, some sections of the act are more pertinent to compliance than
others. To assist those seeking to meet the demands of this act, the following pages cover the key
Sarbanes-Oxley sections:
Summary of Section 302
Periodic statutory financial reports are to include certifications that:
• The signing officers have reviewed the report
• The report does not contain any material untrue statements or material omission or be
considered misleading
• The financial statements and related information fairly present the financial condition and the
results in all material respects
• The signing officers are responsible for internal controls and have evaluated these internal
controls within the previous ninety days and have reported on their findings
• A list of all deficiencies in the internal controls and information on any fraud that involves
employees who are involved with internal activities
• Any significant changes in internal controls or related factors that could have a negative impact
on the internal controls
Organizations may not attempt to avoid these requirements by reincorporating their activities or
transferring their activities outside of the United States
Summary of Section 401
Financial statements are published by issuers are required to be accurate and presented in a manner that
does not contain incorrect statements or admit to state material information. These financial statements
shall also include all material off-balance sheet liabilities, obligations or transactions. The Commission
was required to study and report on the extent of off-balance transactions resulting transparent reporting.
The Commission is also required to determine whether generally accepted accounting principals or other
regulations result in open and meaningful reporting by issuers.
Summary of Section 404
Issuers are required to publish information in their annual reports concerning the scope and adequacy of
the internal control structure and procedures for financial reporting. This statement shall also assess the
effectiveness of such internal controls and procedures.
The registered accounting firm shall, in the same report, attest to and report on the assessment on the
effectiveness of the internal control structure and procedures for financial reporting.
Summary of Section 409
Issuers are required to disclose to the public, on an urgent basis, information on material changes in their
financial condition or operations. These disclosures are to be presented in terms that are easy to
understand supported by trend and qualitative information of graphic presentations as appropriate.
Summary of Section 802
This section imposes penalties of fines and/or up to 20 years imprisonment for altering, destroying,
mutilating, concealing, falsifying records, documents or tangible objects with the intent to obstruct,
impede or influence a legal investigation. This section also imposes penalties of fines and/or
imprisonment up to 10 years on any accountant who knowingly and willfully violates the requirements of
maintenance of all audit or review papers for a period of 5 years
AICPA Code of
Professional Conduct
Effective December 15, 2014 (early implementation permitted).
Copyright © 2014, American Institute of Certified Public Accountants, Inc. All Rights Reserved.
This PDF created using content in the online system as of 9/17/2014
Table of Contents
Preface: Applicable to All Members ………………………………………………………………………….. 1
0.100 Overview of the Code of Professional Conduct ……………………………………………….. 1
.01 ……………………………………………………………………………………………………. 1
.02 ……………………………………………………………………………………………………. 1
.03 ……………………………………………………………………………………………………. 1
0.100.010 Principles and Rules of Conduct ……………………………………………………. 1
0.100.020 Interpretations and Other Guidance …………………………………………………. 1
0.200 Structure and Application of the AICPA Code ………………………………………………… 2
0.200.010 Structure of the AICPA Code ……………………………………………………….. 2
0.200.020 Application of the AICPA Code …………………………………………………….. 2
0.200.030 Citations ………………………………………………………………………………… 3
0.200.040 Transition Provisions …………………………………………………………………. 4
0.200.050 Drafting Conventions …………………………………………………………………. 4
0.300 Principles of Professional Conduct ……………………………………………………………… 4
0.300.010 Preamble ……………………………………………………………………………….. 4
0.300.020 Responsibilities ………………………………………………………………………… 5
0.300.030 The Public Interest ……………………………………………………………………. 5
0.300.040 Integrity …………………………………………………………………………………. 5
0.300.050 Objectivity and Independence ……………………………………………………….. 6
0.300.060 Due Care ……………………………………………………………………………….. 6
0.300.070 Scope and Nature of Services ……………………………………………………….. 7
0.400 Definitions ………………………………………………………………………………………….. 7
.01 ……………………………………………………………………………………………………. 7
.02 ……………………………………………………………………………………………………. 8
.03 ……………………………………………………………………………………………………. 8
.04 ……………………………………………………………………………………………………. 8
.05 ……………………………………………………………………………………………………. 8
.06 ……………………………………………………………………………………………………. 9
.07 ……………………………………………………………………………………………………. 9
.08 ……………………………………………………………………………………………………. 9
.09 ……………………………………………………………………………………………………. 9
.10 ……………………………………………………………………………………………………. 9
.11 …………………………………………………………………………………………………… 10
.12 …………………………………………………………………………………………………… 10
.13 …………………………………………………………………………………………………… 10
.14 …………………………………………………………………………………………………… 10
.15 …………………………………………………………………………………………………… 11
.16 …………………………………………………………………………………………………… 11
.17 …………………………………………………………………………………………………… 11
.18 …………………………………………………………………………………………………… 11
.19 …………………………………………………………………………………………………… 11
.20 …………………………………………………………………………………………………… 11
.21 …………………………………………………………………………………………………… 11
.22 …………………………………………………………………………………………………… 11
.23 …………………………………………………………………………………………………… 12
.24 …………………………………………………………………………………………………… 12
.25 …………………………………………………………………………………………………… 12
.26 …………………………………………………………………………………………………… 12
.27 …………………………………………………………………………………………………… 12
.28 …………………………………………………………………………………………………… 12
.29 …………………………………………………………………………………………………… 13
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AICPA Code of Professional Conduct
.30 …………………………………………………………………………………………………… 13
.31 …………………………………………………………………………………………………… 13
.32 …………………………………………………………………………………………………… 13
.33 …………………………………………………………………………………………………… 13
.34 …………………………………………………………………………………………………… 13
.35 …………………………………………………………………………………………………… 13
.36 …………………………………………………………………………………………………… 14
.37 …………………………………………………………………………………………………… 14
.38 …………………………………………………………………………………………………… 14
.39 …………………………………………………………………………………………………… 14
.40 …………………………………………………………………………………………………… 15
.41 …………………………………………………………………………………………………… 15
.42 …………………………………………………………………………………………………… 15
.43 …………………………………………………………………………………………………… 15
.44 …………………………………………………………………………………………………… 15
.45 …………………………………………………………………………………………………… 15
.46 …………………………………………………………………………………………………… 15
.47 …………………………………………………………………………………………………… 15
.48 …………………………………………………………………………………………………… 16
.49 …………………………………………………………………………………………………… 16
0.500 Nonauthoritative Guidance ……………………………………………………………………… 16
.01 …………………………………………………………………………………………………… 16
.02 …………………………………………………………………………………………………… 16
.03 …………………………………………………………………………………………………… 16
0.600 New, Revised, and Pending Interpretations and Other Guidance ………………………….. 16
0.600.010 New and Revised Interpretations and Other Guidance ………………………….. 16
0.600.020 Pending Interpretations and Other Guidance …………………………………….. 20
0.700 Deleted Interpretations and Other Guidance ………………………………………………….. 22
.01 …………………………………………………………………………………………………… 22
Part 1 …………………………………………………………………………………………………………….. 25
1.000 Introduction ……………………………………………………………………………………….. 25
.01 …………………………………………………………………………………………………… 25
.02 …………………………………………………………………………………………………… 25
.03 …………………………………………………………………………………………………… 25
1.000.010 Conceptual Framework for Members in Public Practice ………………………… 25
1.000.020 Ethical Conflicts ……………………………………………………………………… 31
1.100 Integrity and Objectivity ………………………………………………………………………… 32
1.100.001 Integrity and Objectivity Rule ……………………………………………………… 32
Interpretations Under the Integrity and Objectivity Rule ……………………………………. 32
1.200 Independence ……………………………………………………………………………………… 40
1.200.001 Independence Rule …………………………………………………………………… 40
Interpretations Under the Independence Rule ………………………………………………… 40
1.300 General Standards ………………………………………………………………………………. 100
1.300.001 General Standards Rule ……………………………………………………………. 100
Interpretations Under the General Standards Rule ………………………………………….. 100
1.310 Compliance With Standards …………………………………………………………………… 102
1.310.001 Compliance With Standards Rule ………………………………………………… 102
Interpretations Under the Compliance with Standards Rule ………………………………. 102
1.320 Accounting Principles ………………………………………………………………………….. 102
1.320.001 Accounting Principles Rule ……………………………………………………….. 102
Interpretations Under the Accounting Standards Rule ……………………………………… 103
1.400 Acts Discreditable ………………………………………………………………………………. 105
1.400.001 Acts Discreditable Rule ……………………………………………………………. 105
Interpretations Under the Acts Discreditable Rule …………………………………………. 105
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AICPA Code of Professional Conduct
1.500 Fees and Other Types of Remuneration ……………………………………………………..
1.500.008 Unpaid Fees ………………………………………………………………………….
1.510 Contingent Fees ………………………. …
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