Student Author Information

Savannah DoaneFollow

Access Type

Campus Access Only

Presentation Type

Poster Presentation

Start Date

April 2019

Abstract

Enron and WorldCom are two of the most well-known financial statement fraud cases of the early 2000s and led to the passing of the Sarbanes-Oxley Act (SOX). SOX attempted to address the flaws in corporate governance to prevent future fraud of the same magnitude and enabled the government to prosecute CEOs and CFOs found guilty of fraud. Most literature regarding the effectiveness of SOX focuses on the effects of SOX on financial statements, auditing and internal controls. This study will investigate how SOX has shaped the corporate environment and emphasized the role of integrity in accounting and reporting.

This research project will provide a case study of Enron and WorldCom demonstrating how the corporate governance supported using accounting to commit fraud. The case study will focus specifically on the corporate governance at both companies leading up to financial statement fraud. An examination of SOX provisions directly related to corporate governance will follow the case study to identify how SOX intended to improve the integrity of accounting within corporations. The examination features journals including studies of corporate structure, interviews from audit managers and partners from three of the Big 4 accounting firms regarding their personal views on the changes brought about by SOX, and how the role of the board of directors has expanded since the passing of SOX. The project will conclude with an investigation into the current state of corporate culture and how SOX has altered corporate governance to prevent and detect financial statement fraud.

Faculty Mentor(s)

Dr. Francis Bush, Dr. David Murphy, Dr. Laura Kicklighter

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Apr 10th, 12:00 PM

The Effect of the Sarbanes-Oxley Act on Corporate Governance

Enron and WorldCom are two of the most well-known financial statement fraud cases of the early 2000s and led to the passing of the Sarbanes-Oxley Act (SOX). SOX attempted to address the flaws in corporate governance to prevent future fraud of the same magnitude and enabled the government to prosecute CEOs and CFOs found guilty of fraud. Most literature regarding the effectiveness of SOX focuses on the effects of SOX on financial statements, auditing and internal controls. This study will investigate how SOX has shaped the corporate environment and emphasized the role of integrity in accounting and reporting.

This research project will provide a case study of Enron and WorldCom demonstrating how the corporate governance supported using accounting to commit fraud. The case study will focus specifically on the corporate governance at both companies leading up to financial statement fraud. An examination of SOX provisions directly related to corporate governance will follow the case study to identify how SOX intended to improve the integrity of accounting within corporations. The examination features journals including studies of corporate structure, interviews from audit managers and partners from three of the Big 4 accounting firms regarding their personal views on the changes brought about by SOX, and how the role of the board of directors has expanded since the passing of SOX. The project will conclude with an investigation into the current state of corporate culture and how SOX has altered corporate governance to prevent and detect financial statement fraud.