Money. The thing that everyone needs, wants, and basically cannot get anything done without. From the largest of companies to the smallest mom and pop operation, the drive is to make money so we are able to DO something with it. Unfortunately, at times taking funds and using them at the expense of others is greater than the drive to satisfy “normal” uses for money. Accounting scandals have occurred since the beginning of time, but we are more familiar with names like Enron, WorldCom, and Madoff which are fine examples of what NOT to do. Legislation, such as the Sarbanes-Oxley Act (SOX), was passed to establish guidelines for businesses to follow to ensure proper accounting and ethical practices.
Since it is already an intimidating field of practice, introducing new laws and regulations increased the “audit fears” of most large corporations, small businesses, and the individual taxpayer. Because of the accuracy and incorporation of government guidelines into their code, the use of home, business, and online accounting software used to files taxes has also increased. The Government Accounting Office stated the amount of taxes filed electronically jumped from fifty-two percent in 2005 to seventy-one percent in 2010, saving the IRS, businesses, and taxpayers millions.
Many of the accounting issues of the past had nothing to do with mistakes, but involved individuals who skirted past laws and embezzled money for their own benefit. The accuracy of the software is of no consequence, the “human factor” is a characteristic that cannot be calculated. The legislation enacted by the SOX Act stated there should be checks and balances in place to ensure the “human factor” does not come into play. Practices such as a business’s accounting department having no connection to purchasing or having an independent accounting firm are excellent ways to guarantee company, and public, loyalty.
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