Impact of Unethical Behavior Article Analysis

Teresa Watkins
ACC 291
January 23 2!1"
#ichael Bluvas
Impact of Unethical Behavior Article
$otential acts lea%in& to unethical practices an% 'ehavioral in accountin& are evi%ent(
These acts are in violation of the )ar'anes *+ley Act of 2!!2 ,)*-.( A recent article on the
stu%ent /e'site is revie/e% to i%entify potential factors lea%in& to unethical practices an%
'ehavior( The article analy0e% is calle% 1Becomin& a #ore 2elational 3irm in the $ost4)ar'anes4
*+ley 5ra6(
As e+presse% 'y the article the effects of )*- have 'een consi%ere% 'y companies in
/hich use au%itin& services as their main source of 'usiness ,Jelinek Jelinek 2!1!.( )*- have
cause% a&encies to have a stron& 'attle o'tainin& clientele( The )*- act has chan&e% provisions
in /hich %isallo/ an a&ency to sale services %irectly to company personnel ,Jelinek Jelinek
2!1!.( This has resulte% in a&encies havin& to &o an outsi%e committee to sale services or
pro%ucts ,Jelinek Jelinek 2!1!.( The act also re7uires the au%itor a&encies to resale from
services after 8 years an% %isallo/s them to seek employment /ith a previous client /ithin of a
year of last au%it ,Jelinek Jelinek 2!1!.( These ne/ rules have cause% the a&encies to have very
strict rules of operation proce%ures( With the information o'taine% in the article is has 'een
relevant that au%itin& a&encies are havin& %ifficulty ren%erin& services( )o if au%itin& a&encies
are not %oin& au%itin& then companies are use internal au%itors(
With internal au%itors the unethical practices an% 'ehavior chances have increase%( These
are ho/ever situations even /ith an au%itin& a&ency that can lea% to unethical practices an%
'ehavior( Thus misuse of fun%s receive% is a type of unethical practice( $otential scenarios in
/hich unethical practices an% 'ehavior can 'e encountere% are i%entifie%( When fun%s are use%
for items other than authori0e% the fun%s use is unethical( A situation that coul% lea% to misuse is
/hen a company is short of fun%s in one area an% to finance another activity the company uses
other fun%s( This lea%s stock4hol%ers in a %irection of misconception of fun%s thus causin& a
false picture of financial health( Another situation of unethical practice an% 'ehavior is the hi%in&
of lia'ilities or %e't( When financial statements %o not report a %e't or lia'ility a&ain company9s
financial health is misrepresente%( The practice of hi%in& lia'ilities or %e't coul% 'e to make the
company look 'etter to investors or cre%itors( The ne&lect of information /oul% cause %e't to
income ratio 'e more favora'le(
In summary an article /as analy0e%( The article offere% information pertainin& to au%itors
havin& to chan&e metho%s to 'ecome complaint /ith )*-( With the strict proce%ures the
au%itors are not ren%erin& services as much as 'efore act( Au%itors mi&ht %ecrease sales 'ecause
companies have chosen to use internal au%itors to %etour from %ealin& /ith the chan&es( This
'ein& sai% a company coul% have potential risk of unethical practice or 'ehavior( When this
happens unethical practices an% 'ehavior /ill 'e cau&ht in a manner that has alrea%y of cause
lon&4term effects( To improve accountin& practices au%itors of outsi%e 'usiness /ill nee% to 'e
hire% to 'e a'le to catch misuse of fun%s an% lack of reportin& lia'ilities(
References
Jelinek :( ; Jelinek 2( ,2!1!.( Becomin& a more relational firm in the post4sar'anes4o+ley
era( The CPA Journal, 80,9. <"4<"4<=( 2etrieve% from
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