According to Miller and Bahnson, the misrepresentation of financial statements to make a company appear to be thriving is rampant even with the threat of companies closing and some leaders of companies who have practiced the art of doctoring the books serving jail time. Miller and Bahnson ask why auditors of companies such as Enron allowed or even assisted with these unethical practices. The claim is that two character flaws can be related to the practice of doctoring financial reports ignorance and arrogance.
Miller and Bahnson believe that for one to be an expert in ones field leaves no room for ignorance in that chosen field. The field of financial reporting for instance, is inexcusable because of the adverse affect that would be put upon the misinformed public. Along with Miller and Bahnson, authors Albrecht, Stice, Stice and Swain, state that the purpose of reporting finances is to inform the public and aid in making decisions based on the report for investing or to help make decisions for the company such as upgrades or layoffs.
My company could quite easily fall into the category of arrogance in that the upper management has a tendency to think they know more about the company than workers on the floor. While they may be right in some cases in others they have turned a deaf ear and will not listen to suggestions. I will not pretend to know how the company's financial reports are done as I am not involved in that area of the business. However, if the finances are ran like the floor is ran then my company could be in trouble. The business needs to ensure the right people are in position to do a proper job and accurately report the findings. A suggestion would be to evaluate each team member and make decisions based on the outcome.
The importance of an accurate financial report for any company is of the utmost importance. The unethical reporting of companies such as Enron and WorldCom brought about changes such as stronger enforcement of the regulations attempting to prevent the deliberate misrepresentation of records. President Bush enacted the Sarbanes-Oxley Act( of 2002 which basically raised the standards at to how and what a company delivers in the financial statements. Following the guidelines in the Sarbanes-Oxley Act a company will know that the reports are as accurate as possible.
ReferencesMiller P., & Bahnson, P. (2004, September). The roots of all evilin financial reporting. Retrieved November 10, 2007 fromUniversity of Phoenix, General Onefile Web site:http://find.galegroup.com/ips/start.do?prodId=IPSAlbrecht, S., Stice, J,, Stice, E., & Swain, M. (2007). Accounting:Concepts and Applications, 9e. Retrieved November 10, 2007 fromUniversity of Phoenix, Web site:https://ecampus.phoenix.edu/content/eBookLibrary/content/eReader.h