Spaine 1
Brittany Spaine
Dr. Bridget R. Moore
ENGL-1301-I52
7 September 2018
Accounting Challenges
The accounting profession has an important significance in today’s business environment
and faces many challenges in the upcoming years. This is caused by a seemingly unending series
of accounting scandals that grabbed the newspaper headlines over the last few years. On the other
hand, challenges are also caused by new regulations and accounting standards, which were
introduced by regulatory bodies worldwide to prevent frauds and accounting scandals in the future.
Accounting scandals like WorldCom, Enron, Health South, Parmalat and many more have
shaken the public’s trust in the accounting profession. Therefore, it is vital for the profession to
rebuild its credibility and to regain the trust of the market and investors. The challenges facing the
accounting profession are manifold. One of the most important challenges for accountants will be
a rethinking, as they cannot see themselves as the providers of historical financial information
anymore. Instead, the public demands from them to serve as the conscience of the corporation.
Moreover, they have to act as gatekeepers to ensure that accounting standards are implemented
properly, not just conveniently. Another challenge for accountants, as well as for auditors, is to
understand the business implications of financial decisions and actions, as finance and accounting
forms an integral part of business strategy. Therefore, greater responsibility and increased scrutiny
are being imposed on accountants and auditors alike.
Spaine 2
The Sarbanes-Oxley-Act (SOX), which was signed into law on July 30, 2002, represents
the most significant improvement in security laws in the past decades and has changed the work
of public accounting firms as well as the work of corporations dramatically. Although the
application is only mandatory for companies which are listed at a stock exchange in the United
States, at the moment, it has had a major impact on the work of accountants and auditors
worldwide. This is due to the fact that other regulatory bodies, for example the International
Accounting Standards Board, will have to consider the adoption of the law as well to strengthen
Corporate Governance of companies. The major challenge of the Sarbanes-Oxley-Act for
accountants and auditors will be represented by Section 404 of the Act, which dictates companies
to describe business processes and to define control procedures to decrease the risks of errors and
manipulations in the financial statements. Because of these requirements and the dynamic and
