When a particular occupation is surrounded by controversy and scandals, in most cases this spells trouble for individuals involved, or looking to become involved, in the field. A specific profession that does not follow suit is accounting. Accounting is one of the few occupations where you will see an inverse relationship with regards to the quality of work in the particular field and subsequent job opportunities. No matter how despondent things may seem in the accounting field, there will be a great deal of effort put forth to ensure that there will be better days ahead.
American International Group (AIG) was one of the largest most prestigious insurance agencies in the world. Following many years of reported success and unprecedented growth; the public was informed that the financial position of the company was misstated due to faulty accounting procedures and lack of proper oversight. On March 30, 2005, AIG publically acknowledged improper bookkeeping over a fourteen year period that could have reduce the value of the company by over a billion dollars. They admitted to improperly accounting for the insurance transactions to help bolster assets, along with several other in depth examples of problematic accounting procedures. When scandals like this occur, fear is struck into the hearts of investors all across the country. Investors subsequently lose confidence in the market causing a domino effect throughout the entire economy. Everything and anything has to be done in order to restore this confidence and ensure that investors will not have to suffer from the effects of similar accounting scandals in the future.
We have seen more accounting scandals in the U.S. over the past 10 years than we have ever experienced before. It has become almost commonplace to turn on the news or read the newspapers and see negative information leaking about companies. For this reason, it is safe to say that our economy has seen better days. From Enron and WorldCom, to more recent scandals like AIG, huge companies are committing fraudulent acts that are costing investors billions of dollars.
In 2002, the Sarbanes-Oxley Act was made in response to a number of major corporate and accounting scandals. The Act contains eleven sections, ranging from additional Corporate Board responsibilities to criminal penalties. It also involved the Securities and Exchange Commission (SEC), and required them to implement rulings and requirements to comply with the new laws. Also, the severity of these scandals has become so prominent that Federal Legislation was enacted in order to increase penalties and make the company’s chief executives personally responsible for falsely reporting financial information.
These changes in legislation should increase scrutiny towards a company’s financials. Two of the most important aspects in reporting adequate financial information are good form and substance. These strides will mandate the correct use of the matching principle and the periodicity assumption. This will also encourage proper accounting procedures and make sure that Generally Accepted Accounting Principles (GAAP) are being followed properly. In the long run, this will diminish the occurrence of fraudulent acts within corporations.
In light of these current strides that the Sarbanes-Oxley Act and Federal Legislation have made, accountants should see a substantial increase in job opportunities. Students that are willing to put forth the hard work and time it takes to earn an accounting degree will enter a job market that is starved for educated and ethical accountants. Additionally, individuals that choose to become a Certified Public Accountant (CPA) will become even more sought after. They will be hired to help thoroughly audit financial records and ensure adherence to GAAP and other federal legislation.
In addition, management and internal auditors will be increasingly important. They will be essential in the process of discovering and elimination fraud before an external audit occurs. In more specific cases, such as individual and organized fraudulent crimes, forensic accountants will see an increase in job opportunities. Lastly, jobs for government accountants will increase in an effort to make government agencies more proficient and accountable.
In a time when jobs may seem scarce, accountants are thriving at an all time high. The ongoing problem surrounding these scandals in large corporations needs to be put to an end. Well educated accountants will serve as the core of the process to help eliminate these problems. This will lead to great opportunities for accounting students right out of college. Having the opportunity to immediately branch out and have a direct impact on the economy is an excellent opportunity an accounting major can provide. Opportunities like this are something that people of all occupations are striving for and for some it may take years to achieve. So if you are currently undecided on what major to pursue, it is safe to say that accounting is the way to go.
About the Author
Hi, my name is Chris Povorotney and I am an Accounting Major at West Chester University.
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