Revisions of Off-Balance Sheet Financing Essay -- Business Finance

During the 1990s, the United States had one of the close successful economic periods in history. The GDP of the democracy increased substantially and unemployment was at a historically low level. With the success of the U.S. economy during this period spilling over into the next decade, revelations of corporate scandal and corporate presidency oversight came to light. The Enron scandal of 2001 and the Wall Street Meltdown of 2008 are two noteworthy events of inadequate accounting policies that led to economic catastrophe during the past decade. The Enron mountains flawed accounting practices were perpetuated through the utilization of fraudulent special interest entities that were used to hide losses and rising debt sustained by the accompany during previous fiscal periods. The Wall Street Meltdown can be highly attributed to the use of mortgage backed securities and other creative investment vehicles that were distributed passim the world as safe investments with rewarding re turns. Both of these events were a product of the improper use and abuse of off-balance sheet accounting methods.The governments reactions include the creation and revision of new and existing laws and governing bodies. As a direct result of the current corporate scandals, The Sarbanes-Oxley Act of 2002 (SOX) was created. At the time, SOX was the first and most influential financial system overhaul in response to the current wave of corporate corruption. A provision of SOX established the common Company score Oversight Board (PCAOB). The intent of SOX and its provisions were to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes (Sarbanes-Oxley Ac... ....R. Res. 3763, Sarbanes-Oxley Act of 2002. 107th Cong., 107-204 Public Law 116 STAT. 745 (2002) (enacted). Kermis, George F. and Marguerite D. Kermis. Model for the Transition from Ethical Deficit to a Transparent Corporate Culture A Resp onse to the Financial Meltdown. Journal of schoolman and Business Ethics, Fall, 2009.Weissman, Robert, and James Donahue. Wall Streets Best Investment 10 Deregulatory Steps to Financial Meltdown. Multinational Monitor January/February (2009) 10-31. Jeffrey, Peter. International Harmonization of Accounting Standards, and the Question of Off-Balance pall Treatment. Duke Journal of Comparative & International Law 12.341 (2002) 341-51. Feng, Mei, Gramlich, Jeffrey D. and Gupta, Sanjay, Special Purpose Entities Empirical Evidence on Determinants and Earnings Management. The Accounting Review (January 9, 2006). 1-55.