If the Sarbanes-Oxley Act makes corporations so accountable, why doesn't it apply to the Federal Government?
- 1 decade agoFavorite Answer
Well, first of all, the Sarbanes-Oxley Act didn't make corporations accountable. It just let management know that the corporation's leaders would be held responsible for the financial statements (and note disclosures) of the company. CEO's and CFO's now must sign off on the financial statements. They're still depending on their accountants to get take the actual numbers and convert them into the best possible presentation, just like your tax accountant does for you every April.
The answer to your question has more to do with why the law was enacted than whom the law applies to. The creators of the act were disgusted by the current state of affairs in corporate america, which, if you'll remember was a make-up-numbers-if-you-have-to kind of accounting style so that maximum shareholder return could be given. Accountants and lawyers were creating variable interest entities (VIE's) and other fake "closely-held" businesses that supposedly had nothing to do with their company that they could dump their losses into. Then they told the auditors that the books of those new entities didn't need to be consolidated upwards into the numbers of the corporation because they weren't part of the organization. Any company would look good if they can mold and shape their financial statements like that.
So the Act was in response to that corrupt corporate culture. The culture of the federal government probably has some financial manipulation in it as well (example: the $500 toilet seats and $800 hammers you hear about), but the governmental accounting policies weren't under nearly as much duress at the time of the creation of SARBOX.
Now, as an auditor, I would love to go audit the heck out of the Army or FBI. There HAS to be some funny business going on there somewhere.
Hope that answers your question!Source(s): I'm an accountant and auditor for public and not-for-profit companies.
- PerdendosiLv 71 decade ago
Because Sarbanes Oxley is related to disclosures and management of corporate assets. The government's accounting systems are MUCH more open than your average corporation--the GAO, public records, etc., abound. There is "accountability" too in federal government-- you can vote those guys out. In corporations, an individuals' share is usually so little that they can have next to no voting influence. At least in your district or state, there's one person, one vote.
- TeeknoLv 71 decade ago
Because the Federal Government is not a corporation.
- kaiserLv 44 years ago
the federal government waste extra funds than the inner maximum sector. I as quickly as worked for the federal government and that i observed lots waste and persons that would desire to come to the construction yet did no longer no longer something all day. i could no longer stand for the reason that a super style of human beings have been employed devoid of them having any accountability I advise genuinely 0 paintings to do. that's a waste of the tax payers funds. as quickly as you have been employed and are there for 3 years you won't have the ability to be fired. i ultimately supply up and went to paintings in the inner maximum sector the place human beings actual paintings for his or her pay. i might would desire to assert no on your question. the federal government knows the thank you to spend funds yet they do no longer understand the thank you to maintain funds. They spend all they have and extra. hence they do no longer understand the thank you to regulate funds or the country. I consider Mike Huckabee approximately term limits.
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- Elizabeth HowardLv 61 decade ago
For the same reason legislation rarely affects the legislators.
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- 1 decade ago
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