Introduction to Business and Finance Essay Example | Topics and Well Written Essays - 3750 words

Introduction to Business and Finance - Essay ExampleAccounting scandals is becoming a norm with a number of recent story scandals that come into sight each year. These report scandals has shaken the frugality and costed the stakeholders a great deal. In the last couple of years a few most talked close to scandals were Enron, WorldCom, Barings, Parmalat and Hollinger, where billions of dollars accounting fraud happened. Not only did the corporations and accounting firms came into question but also the performance of course exchanges, rating agencies, financial journalists, bankers and lawyers was questioned (Richard Dyson). These scandals have resulted in firms closing, thousands of people being jobless and many losing money in stocks, apart from the stock exchange crash. Public trust in the accounting and make-uping procedures has been shattered. People argon especially reluctant to invest their money in stocks, which results in stock exchange fall.Corporate Goverance is liab le to manage certain laws in the corporation and if not done effectively can result in loss for the firm. Corporate Governace in the firms is highly blamed when talking about the financial scandals. As cases of scandals, bankruptcy, accounting frauds atomic number 18 unfolding, the concern over the transparency of the financial reports is increasing. All these companies used financial gimmicks to inflate their cash in flow and profits in order to jack up their share prices and thus accumulate wealth. The investors are confronted with large, well-known companies, disappearing almost overnight. In the process not only small investors but purportedly smart, sophisticated investors have been fooled as well (B. S. Rao). Many CEOs, CFOs and other related officers have been acquitted or are under trial as a result. One example of this is the recent indictment of Jeffrey Skilling, who was effrontery lifetime prison and has to pay $80 million in fines (CNNMoney). Not only this the stocks of these firms have asleep(p) to decline and now no more exists. The outcome of the other scandals is not different as well.The authorities after all this chaos has been active in taking some steps to stop these practices. In this deliberate the Securities and Exchange Comission is responsible for ensuring the transparency in the company. Steps are taken to guarantee suitable monitoring of management and all the included pesonnel. Accounting ProfessionAlthough most of the accounting firms claim that their trade was only to review the finances, but the indictment of Arthur Anderson has led a question to the credibility of these firms. In this regard the the watchdog role of the auditors comes into question. The firms are now accused of overcharging in order to make the report very much more attractive in order to gain profits and rise the stock prices. A report says that the US government loses over $300 billion each year due to organized tax avoidance prepared by the account ancy firms (Prem Sikka). There were days when the transparency of the markets highly depended on the accounting firms. Today people and investors have grown suspicious towards their perforamance. Here a question of how to regain the broken pride lies ahead of them.Other FactorsApart from blaming the corporations and the accountants for these scandals, certain other factors are to be blamed as well. These ould be the financial jouranalists, the lawyers