After Enron and Worldcom: The Government, Aicpa, and Fasb Responses

Posted: 6 Apr 2004

See all articles by Magdalena Teguh

Magdalena Teguh

Southeastern Louisiana University

Joseph L. Morris

Southeastern Louisiana University

Date Written: January 14, 2004

Abstract

This paper examines the responses of the government, the AICPA, and the FASB after the Enron and WorldCom accounting scandals. The major failures of these companies center on their creative accounting and bad corporate governance. The Congress responded to these issues with the Sarbanes-Oxley Act of 2002. The SEC responded with a variety of measures to restore confidence in the accounting profession; expand the role of management; improve disclosures and financial reporting; improve the performance of audit committees; and enhance enforcement tools. The Auditing Standards Board of the AICPA responded by issuing SAS No. 99, which provides auditors with additional guidance for detecting material fraud. The FASB has been slower to respond due to its lengthier due process rules. The paper discusses whether those responses would have been enough to prevent the Enron and WorldCom financial disasters, and whether they are ample now to prevent corporate failures in the future.

Keywords: Enron, Congress, SEC, AICPA, FASB, Financial Reporting

JEL Classification: G34, G38, M41, M43, M49

Suggested Citation

Teguh, Magdalena and Morris, Joseph L., After Enron and Worldcom: The Government, Aicpa, and Fasb Responses (January 14, 2004). Available at SSRN: https://ssrn.com/abstract=488442 or http://dx.doi.org/10.2139/ssrn.488442

Magdalena Teguh

Southeastern Louisiana University ( email )

Hammond, LA 70402
United States

Joseph L. Morris (Contact Author)

Southeastern Louisiana University ( email )

Hammond, LA 70402
United States
985-549-3100 (Phone)
985-549-2891 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
4,521
PlumX Metrics