1.

Discuss the issues encountered in Enron Scandal and how the Sarbanes Oxley Act
addressed those issues.
The Enron Scandal is a classic example of financial greed that resulted to the
collapse of the whole company. The CEO, used a mark-to-market accounting to hide
financial losses. He then transfers the records to an off the book corporations where the
losses will be unreported making the company look profitable and will acquire more
investors. The CFO of the company, used an SFE or special purpose entities to make the
company/Enron look productive and it provided common stocks to its stockholders. But
then on that same year, the transparency of the company was questioned that made the
employees sell their shares for a straight 30 days. With that intriguing event, Enron was
put into an investigation and later on revealed to have a $591,000,000 in losses and
$628,000,000 in debt. The price of Enron’s shares went from $90.75 at its peak to $0.26 at
bankruptcy. The company paid its creditors more than $21.7 billion from 2004 to 2011.
With that collapse, the Sarbanes Oxley Act was made to tighten the disclosure and
increased penalties for financial manipulation. The financial accounting standards board
was prompted to raise its ethical conduct standards. The Sarbanes Oley Act’s very purpose
is to cut down the incidence of corporate fraud. To address the issues concerning the
collapse of Enron, the Sarbanes Oxley Act wanted to protect investors by closing loopholes
in accounting practices, strengthening corporate governance rules, transparency, and
accountability, and disclosure of requirements.
2. Discuss the issues encountered in World com scandal how the Sarbanes Oxley Act
addressed those issues.

Worldcom exceeded the Enron scandal, being the largest bankruptcy in history by
several times over. Worldcom was a telecommunication company that also went to
bankruptcy the following year that Enron scandal happened. The worldcom’s issue was
about the massive accounting fraud. They have made accounting tricks to maintain the
appearance of ever-growing profitability of the company. They have inflated its net income
and cash flow by recording expenses as investments, reporting a profit of $1.4 billion—
instead of a net loss to lure more investors. The CEO of worldcom was sentenced to 25
years of imprisonment. The Sarbanes Oxley Act was able to address the issues regarding
the Worldcom scandal by providing the provisions in the bill, the section 302 pertains to
 "Corporate Responsibility for Financial Reports." It established, in part, that CEOs and
CFOs must review all financial reports and that the reports are "fairly presented" and don't
contain misrepresentations. This section also established that CEOs and CFOs are
responsible for internal accounting controls. The Act requires year-end financial disclosure
reports and that all financial reports come with an Internal Controls Report. Financial
disclosures must contain reporting of material changes in financial condition. Also stated
in the section 404 if the SEC finds violation, they can be put in jail. This clearly covers the
reason as to why the CEO was sentenced to 25 years of imprisonment.

3. Discuss the issues encountered in Tyco scandal how the Sarbanes Oxley Act
addressed those issues.

The 2002 corporate scandal at Tyco International focuses on the issues of unethical
business practices and associated concerns. In Tyco's case, the issue does not revolve
around financial issues only. The primary ethical considerations of issues were unethical
Leadership, unethical business practice of subordinates, questionable auditing practice on
Tyco’s business, But on the latter, it still involves financial issue as to its ethical issue, and
to relate is the case of the CEOs' tax evasion, such as acquiring art worth millions of dollars,
as one of the aspects highlighted in the Tyco corporate scandal. While his true motivations
for evading taxes are undisclosed, it is possible that they were motivated by materialism
and a desire to avoid raising a red flag about his criminal actions at Tyco. The Sarbanes
Oxley Act addressed these issues by providing the Section 404 requires corporate
executives to certify the accuracy of financial statements personally. If the SEC finds
violations, CEOs could face 20 years in jail. It also provided statements regarding audits
and tax, as to which having new auditor watchdog, the Public Company Accounting
Oversight that prohibits accounting firms from doing business consulting with the
companies they are auditing. Furthermore, they can still act as tax consultants.

4. Discuss the scope and penalties of Sarbanes Oxley Act.

The scope of Sarbanes Oxley Act is only within the premise of the United States.
It is Applicable only to U.S. public enterprises, the latter being understood as any company
which offers its securities (i.e., stock, options, bonds, etc.) for sale to the general public in
the U.S., or from a formal perspective, a company which has filed a Form S-1 with the
Securities and Exchange Commission. Penalties for non-compliance of Sarbanes Oxley act
can be Fines, Removal from listings on public stock exchanges, Invalidation of Directors’
and Officers’ insurance policies.