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

During the 1990s, the United States had one of the most successful economic periods in history. The GDP of the country 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 incorporate scandal and corporate governance oversight came to light. The Enron scandal of 2001 and the groin avenue Meltdown of 2008 are two noteworthy events of inadequate method of accounting policies that lead to economic catastrophe during the past decade. The Enron Corporations flawed accounting practices were perpetuated through the utilization of fraudulent special interest entities that were workoutd to obscure losses and rising debt sustained by the company during previous monetary periods. The Wall Street Meltdown can be highly attributed to the use of mortgage backed securities and other creative investment vehicles that were distributed throughout the arena as safe i nvestments with rewarding returns. Both of these events were a product of the faulty 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 starting time and most influential financial system overhaul in reception to the current wave of corporate corruption. A provision of SOX established the domain Company Accounting Oversight Board (PCAOB). The intent of SOX and its provisions were to value investors by improving the accuracy and reliability of corporate disclosures made consistent 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 changeover from Ethical Defi cit to a Transparent Corporate Culture A Response to the Financial Meltdown. Journal of Academic and Business Ethics, Fall, 2009.Weissman, Robert, and James Donahue. Wall Streets Best Investment 10 Deregulatory Steps to Financial Meltdown. Multinational monitor lizard January/February (2009) 10-31. Jeffrey, Peter. International Harmonization of Accounting Standards, and the Question of Off-Balance Sheet Treatment. Duke Journal of relative & 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.