Ethics Discussion

Posted: August 26th, 2021

Acct 625 Week 1: Ethics Discussion

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Institutional Affiliation

Acct 625 Week 1: Ethics Discussion

Question 1

The Sarbanes-0xley (SOX) Act of 2002 was formulated to help in regulating corporate governance and restore the faith of the public in the oversight role played by federal on corporate governance. The Act also endeavors to prevent future abuse of public corporations. Notably, the Act initiated specific accounting and disclosure rules as well as reforms channeled towards strengthening corporate accountability (Devine & Maassarani, 2011; Gartland, 2016). In its formulation, the SOX Act has particular application to the not-for-profit (NFP) organizations as explained in the following;

Protection of Whistle Blower

The NFP is required to adopt written policies about the procedures that employees should follow in case of whistleblowing to avoid retaliation. At the same time, the organizations are required to make full disclosure of policies and procedures for its employees (Devine & Maassarani, 2011; Gartland, 2016). As well, proper documentation should be done concerning complaints, investigations and related findings for purposes of safety and reference. They are forbidden from reprimanding employees, even if the claim is unfounded.

Destruction of Documents

 In this case, NFP should adopt written policy about procedures required in disposing and storing corporate records. These include specific guidelines followed when handling voicemail, electronic files and back-up procedures for covers (Gartland, 2016). Equally, there should be regular checkups on the reliability of the system.

Recommendations

            For best practices while using SOX, NFP should embrace the following;

1. Establish audit committees that are mandated to oversee the processes of reporting of accounting and financial information. The composition of the committee should be made of independent board members, among them; there should be at least one financial expert.
2. The auditors should consider the annual auditing of their financials.

Question 2

Yellow book training

Yellow book training is a curriculum established to train auditors and financial experts on the requirements for providing audit reports, quality control of audit organization, and professional qualifications for the auditors (Gartland, 2016). The aim is to instill professionalism in accounting and financial reporting perthe established government reporting standards.

Question 3

There are several references made in the article that are useful, especially to the professional training accountant. The first reference is the AICPA Code of Professional Conduct, which stipulates the performance guideline for Certified Public Accountant professionals. The article further specifies that the Act of Discreditable rule as contained under ET Section 1.400.001 addresses the services that government entities are mandated to provide. Hence, CPAs should follow the laid down guidelines when addressing these guidelines (Gartland, 2016). Other useful references are Generally Accepted Government Auditing Standards (GAGAS) according to U.S Government Accountability Office, through Yellow Book.

Question 4

In my understanding, auditors’ documents could be subjected to the Freedom of Information Act (FOIA); any person has the right to access information under the agency. The critical information that is subject to FOIA includesa general description of the records, and exempt records can be voluntarily released unless they are prohibited under the privacy law. The agency-audited reports can also be released to Congress as a mandated body whose use of information is prescribed for a particular function. For instance, if the information is needed to further certain cooperative performance functions (Devine & Maassarani, 2011). However, the agency has the responsibility to demonstrate that a given record lies within certain limits of disclosure.  Finally, in the case of auditors preparing the reports, knowing the information of the contents does not affect the quality of your work. However, the principals of privacy should be embraced in the auditing process to avoid unnecessary disclosure of information.

References

Devine, T. & Maassarani, T. (2011). The corporate whistle-blower’s survival guide: a handbook for committing the truth. San Francisco: Berrett-Koehler Publishers.

Gartland, D. J. (2016). Risks of not-for-profit and government audits. Journal of Accountancy, 221(4), 16-18.