Accounting Scandals

Accounting scandals
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The responsibility stewardship had a wide reaching impact on corporate governance, since functions and participants of the corporate governance process are considered (Turner Weickgenannt, 2008). There is more emphasis on the role of management oversight to ensure that there are effective internal controls. This is also related to ethical conduct and responsibility stewardship, since the corporate leaders then need to be well versed in a company’s financial system. In any case, the case for enhanced auditor independence is that the auditor are less inclined to provide non-audit services, while they improve audit partner rotation (Turner Weickgenannt, 2008).
Under section 302 of the Sarbanes-Oxley Act, the CEO and CFOs are mandated to ensure that the financial reports reflect a true and fair view of the financial information. This calls for the company leaders to disclose all material respect (Sarbanes-oxley-act.biz, 2015). As such the leaders were held more accountable for financial statements, with the need to improve the oversight of audit committees and board of directors. In any case, the Board of Directors is tasked with forming an audit committee or takes such responsibilities, but they could also influence the selection process of the audit committee. The corporate scandals that affected Enron and WorldCom prior to the SOX being adopted mainly reflected the drawbacks of having ineffective monitoring systems in place. Taking into account the shareholder interest is emphasized in line with stewardship responsibility.
The emphasis on the management’s assessment of the internal control system under SEC.404 shows that integrity is crucial to maintain stewardship responsibility (Sarbanes-oxley-act.biz, 2015). Since managers are agents of the shareholders, they wer...