By Reubin Turner
A recent article published in the Dallas Morning News profiled a senior lecturer at the University of Texas at Dallas who teaches accounting. Richard Bowen, a former executive in Citigroup’s mortgage lending department, rose to prominence after reporting unethical practices within the company. After filing a complaint under the Sarbanes-Oxley Act, Bowen testified before Congress, helped bring a $7 billion settlement against the company and ushered in what I call the “age of the whistleblowers.”
After struggling through my financial accounting class, I gained an immense respect for those who choose to make a career out of accounting. I also realized the importance of practicing ethical behavior.
A whistleblower in the world of accounting describes those who alert authorities of businesses practices that misrepresent information on financial statements. These statements are meant to deceive potential investors about the financial health of company.
The passing of the Sarbanes-Oxley Act in 2002 has changed the way financial reporting is done due to several accounting scandals including Enron, which involved a Baylor alumnus. The act adds criminal penalties to companies that misrepresent financial information, which extends to internal auditors. The act also requires the Securities and Exchange Commission to outline how public corporations are to comply with the law. Rather than risking their careers, auditors and internal executors are making sure their companies comply.
Last year, an auditor with the Federal Reserve filed reports against Goldman-Sachs about unsound practices. It seems auditors are now more concerned about the possibility of winding up in prison if they don’t comply. This will have a huge impact on the accounting field in the future.
Up until April 15, the last day to file taxes, students doing internships in the field of tax returns and auditing will have their hands full of clients interested in how to get the biggest breaks, even if the methods of doing so are not legal. Auditors will likely be pushed to “look over” aspects of the company that don’t seem right. But in students’ accounting careers, I encourage them to practice responsible business ethics.