PWC Audit Scandal and Fraud. Technology Assignment

PWC Audit Scandal and Fraud
Name
Institutional Affiliate
PWC Audit Scandal and Fraud
Introduction
Transparency in the accounting and reporting of financial data and other valuable information concerning corporate organizations that are listed as public entities makes for one of the crucial elements in the evaluation of their performances in the market by both the existing and potential investors. The decision to invest in a corporate organization or transact in the securities and stock markets is dependent or rather informed by the information revealed by its financial reports and the perceived efficacy of its corporate governance. However, embracing effective corporate governance and ensuring transparency in financial reporting requires adherence to the set standard operating procedures that monitor and control the conduct of all the stakeholders involved in the delivery of the same. The Sarbanes-Oxley (SOX) Act of 2002 or the Public Company Accounting Reform and Investor Protection Act provide an excellent framework for monitoring and controlling the conduct of public companies towards financial reporting and governance. The SOX Act was an endorsement of Senator Sarbanes and Representative Michael Oxley following a streak of corporate scandal and accounting frauds witnessed in the United States in the years 2000 to 2002 CITATION Fle08 \l 1033 (Fletcher, 2008). At the center of one of the biggest corporate frauds in the country that shattered the public’s confidence in financial reporting or disclosure of financial reports were two organizations, Enron and WorldCom. In essence, the SOX Act functions to mitigate the uncertainties created from the potential fraudulent activities in accountancy and auditing of corporate organizations and thus protecting the investors while also restoring their confidence in the stock market. The Act accounts for a significant reduction in corporate fraudulent activities in the United States and around the world through the effective application of its key provisions. An evaluation of the Act’s application in the handling of the Price Waterhouse Coopers (PWC) Audit Scandal and Fraud in India provides an excellent platform for the analysis of some of its primary provisions and their efficacy in reducing corporate fraudulent activity.
The SOX Act and its Role in Reducing Corporate Fraudulent Activity
The SOX Act of the Public Company Accounting Reform and Investor Protection Act functioned to deliver on three primary objectives; mitigating corporate fraud, restoring investor’s confidence in the stock market, and enhancing transparency for increased reliability of corporate financial reporting CITATION Fle08 \l 1033 (Fletcher, 2008). Achievement of the outlined objectives is dependent on the public companies’ ability to adhere to the set requirements of the Act. An overview of the Act highlights the key requirements for compliance to include strengthening of the public companies’ audit committees, the performance of internal control tests, as well as strengthening of the financial disclosures CITATION Fle08 \l 1033 (Fletcher, 2008). Another significant requirement of the Act is for the corporate organizations to put measures towards ensuring that the direc...