Graduate Accounting Capstone - Accounting and Audit Enforcement Research Paper

Graduate Accounting Capstone - Accounting and Audit Enforcement - Research Paper Example It provides high level of care to the patients for recovery from conditions like stroke, orthopaedic and neurological disorders, brain injury, spinal cord injury, cardiac and pulmonary conditions. HealthSouth Corporation was found to be involved in corporate accounting scandal. The Founder, who was also the Chairman and CEO of the company, was accused of influencing the employees to manipulate the figures in the financial statement and exaggerate the earnings for meeting the expectations of the stockholders. He was the first executive to be caught in the Sarbanes Oxley Act for manipulating the financial returns of the company (Will, Handelman, & Brotherton, 2012). Richard M. Scrushy was accused of conspiracy, money laundering charges, securities fraud and charges of overstating the company’s earnings by approximately $ 3 billion (Forbes, 2013). The federal investigators stated that the company intentionally overstated the earnings in the financial statement for meeting the est imates of the analysts. At the same time the company had to make efforts to hide the accounting fraud attempt from auditors. Now, the question that was raised was whether the auditors failed in finding the fraud activity or they overlooked the company’s fraud. SOX Regulations in Public Healthcare Organizations There are strict regulations imposed by the SOX Act on the public companies (Greene, 2009). It includes: Creation of Public Company Accounting Oversight Board for overseeing the entire process of accounting of the organizations. Limitation in the types of services that will be provided by the accounting firms to the public companies (clients). Increase in the disclosure requirements for the public companies. Requirement of top executives in the public companies who will take the responsibility of all the contents in the financial statements. Requirement of excellent analysts for disclosing the probable conflicts of interest. Added rigorous punishments for various misdee ds and frauds. These provisions have been imposed to public companies for controlling the regulations of corporate governance and business ethics. This will prohibit them from violating the GAAP rules and manipulating the financial statements of the companies for their own benefit. SOX Regulations in For-Profit and Not-For-Profit Healthcare Organizations There has been increase in the scrutiny for both for-profit as well as not-for-profit organizations by the regulators, donors, bondholders and the rest of the external stakeholders. It is because there have been an increased suspicion among the investors and other external stakeholders about the proper maintenance of corporate governance and business ethics in the healthcare organizations. It has been found that for Not-For-Profit companies including the hospitals as well as other different healthcare organizations, there have not been very strict disclosure requirements as mandated in case of the public For-Profit organizations. Th is is a problem faced by the bondholders, investors and other stakeholders who want to judge the quality of corporate governance and management in these Not-For-Profit organiz