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Recommended: Surbanes-oxley act
Perhaps the biggest takeaway from Chapter 2 for me was the staggering number of breaches, and the purely reactive method of legislation to deal with these events. It is unfortunate, but laws seem to be changed as a matter of reaction to incidents, rather than a proactive method of anticipating those incidents. For example, the Sarbanes-Oxley Act of 2002, which was in response to the widespread corporate corruption scandal of Enron. It seems that many of the points regarding transparency in accounting were common sense, and could have been implemented prior. However, in the cybersecurity and business world, I suppose it is hard to anticipate corruption before it happens. From chapter three, what stood out to me was the huge amount of meticulous
Compared to past, today we have sound security policies, established cyber laws, active monitoring systems, and extra layers of security in form of firewalls etc., to prevent access to uninvited guests for your network and most importantly increased user awareness. But still there exist vulnerabilities in and around the cyber space of which the hackers exploit for different purposes. The monetary losses we suffer today are much greater in magnitude as well as in mass. But, we definitely are in a better place compared to the time the events in this book took place.
George W. Bush called the SOX Act “the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt”.
The Dodd-Frank Wall Street Reform and Consumer Protection Act brought the most significant changes to financial regulation in the United States since the reform that followed the Great Depression. It made changes in the American financial regulatory environment that affect all federal financial regulatory agencies and almost every part of the nation’s financial services industry. Like Glass-Steagall, the legislation passed after the Great Depression, it sought to regulate the financial markets and make another economic crisis less likely. Banks were deregulated in 1999 by the Gramm-Leach-Biley Act, which repealed the Glass-Steagall Act and essentially allowed for the excessive risk taken on by banks that caused the most recent financial crisis. The Financial Stability Oversight Council was established through the Dodd-Frank Wall Street Reform and Consumer Protection Act and was created to address the systemic risks in the United States financial system and to improve coordination among financial regulators.
In the evolution of the Dodd-Frank Wall Street Reform and Consumer Protection Act, there were two events that influenced the characteristics of the proxy access rules that the SEC ultimately passed.
In late 2008, the world economy seemingly grinded to a halt. Wall Street, unable to reconcile the liquidity crisis and financial losses that stemmed from its bad bets on mortgage backed securities, turned to the United States government for help. What resulted was the $700 billion Troubled Asset Relief Program (“TARP”), the largest government bailout in the history of the United States. After the dust settled and Wall Street, with hundreds of billions of taxpayer dollars, managed to avert a global financial meltdown, Congress put pen to paper to ensure that the same crisis would never happen again. On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), a nearly 900-page behemoth of financial reform, was signed into law. The Dodd-Frank Act was meant to reform that the unsavory and opaque practices that led to the 2008 crisis – it does so by introducing a stricter financial regulatory regime in which Wall Street must operate.
...the man for whom the scheme is named. It was also the largest investment fraud by a single person. The most important effect of the Madoff scandal is the reformation that occurred in the SEC afterward amid shock at their inability to catch Madoff in the act during their investigation. The enforcement division was revamped to focus on more concerning markets and was more heavily staffed with market experts. The Office of Market Intelligence was created with the responsibility of managing tips. The SEC began to employ more undercover agents and advocate for a protection program for whistleblowers. Back-office personnel oversight was enacted. Additional funding was approved for the SEC. Surprise examinations were approved to ensure the existence of reported assets. In general, the regulating power of the SEC was vastly expanded to prevent similar crimes from occurring.
Throughout the past several years major corporate scandals have rocked the economy and hurt investor confidence. The largest bankruptcies in history have resulted from greedy executives that “cook the books” to gain the numbers they want. These scandals typically involve complex methods for misusing or misdirecting funds, overstating revenues, understating expenses, overstating the value of assets or underreporting of liabilities, sometimes with the cooperation of officials in other corporations (Medura 1-3). In response to the increasing number of scandals the US government amended the Sarbanes Oxley act of 2002 to mitigate these problems. Sarbanes Oxley has extensive regulations that hold the CEO and top executives responsible for the numbers they report but problems still occur. To ensure proper accounting standards have been used Sarbanes Oxley also requires that public companies be audited by accounting firms (Livingstone). The problem is that the accounting firms are also public companies that also have to look after their bottom line while still remaining objective with the corporations they audit. When an accounting firm is hired the company that hired them has the power in the relationship. When the company has the power they can bully the firm into doing what they tell them to do. The accounting firm then loses its objectivity and independence making their job ineffective and not accomplishing their goal of honest accounting (Gerard). Their have been 379 convictions of fraud to date, and 3 to 6 new cases opening per month. The problem has clearly not been solved (Ulinski).
Since September 11, 2001, the criminal justice system has improved its methods to secure our nation from terrorist attacks. These improved methods can be summed into four kinds of categories and actions. The first key action the department of justice took was protecting America through investigation and criminal prosecution. The next changes were legal which were made to enhance the counter-terrorism efforts and help with investigation and prosecution. Then there are the structural changes to the operations of agencies to enhance counter-terrorism efforts....
The thing I liked least about this book was the lengthiness and wordiness of it. It was very round-about in getting to the point or conclusion of the topic. It had a lot of extra information that I felt wasn’t necessary or just didn’t really have a place in the chapter. I also found some subtopics much less interesting than others.
When I first picked up this book, I was like, “This is going to be so boring.” Then halfway through the second chapter, I started to get interested. By no time, I finished the book and realized I enjoyed it. I was able to learn about people’s ideas and how hard they worked to get their business to be successful. It was really interesting to learn about these people’s lives and how they changed over time. Also, how their business changed over time as well. Most of these people went through several different business, before they became successful.
This book to me is especially interesting in the midst of the NSA snooping scandal because this book will show that there have been government organizations watching regular people since the revolutionary war. Overall the history of espionage and the spy game is interesting and will never be over.
"This is why the market keeps going down every day - investors don't know who to trust," said Brett Trueman, an accounting professor from the University of California-Berkeley's Haas School of Business. As these things come out, it just continues to build up"(CBS MarketWatch, Hancock). The memories of the Frauds at Enron and WorldCom still haunt many investors. There have been many accounting scandals in the United States history. The Enron and the WorldCom accounting fraud affected thousands of people and it caused many changes in the rules and regulation of the corporate world. There are many similarities and differences between the two scandals and many rules and regulations have been created in order to prevent frauds like these. Enron Scandal occurred before WorldCom and despite the devastating affect of the Enron Scandal, new rules and regulations were not created in time to prevent the WorldCom Scandal. Accounting scandals like these has changed the corporate world in many ways and people are more cautious about investing because their faith had been shaken by the devastating effects of these scandals. People lost everything they had and all their life-savings. When looking at the accounting scandals in depth, it is unbelievable how much to the extent the accounting standards were broken.
In the book: “The Way of the Knife: the CIA, a Secret Army and a War at the Ends of the Earth”, the author Mark Mazzetti mainly talking about the changes between before and after the Pentagon and World Trade Center were attacked by terroristic organization at September 11 2001. Before 9/11 attacks, CIA’s traditional main tasks are associating with the military and spies, and are committed to steal state secrets from other countries, and monitoring the important events that took place around the world. The Pentagon did not do many human spying, and for the CIA did not get the officially permission to kill and CIA need to try its best to avoid killing. After 9/11 attacks, there are many changes, the Pentagon started to do many human spying,
Richard Breeden focused heavily on the role governance played in the downfall of WorldCom and his report details several central objectives that he hoped to achieve with his proposal. His initial objective was to change the way the executives were compensated to better protect the shareholders’ interest. He tries to accomplish this by limiting equity share, capping CEO compensation, and limiting severance pay. The fraud that WorldCom engaged in could be traced to the executives, but was ultimately the result of improper board governance. Because of this, Breeden wanted to redesign the board and how it was structured, along with major changes to the Auditing, Governance, and Compensation committees.
Auditing has been the backbone of the complicated business world and has always changed with the times. As the business world grew strong, auditors’ roles grew more important. The auditors’ job became more difficult as the accounting principles changed. It also became easier with the use of internal controls, which introduced the need for testing, not a complete audit. Scandals and stock market crashes made auditors aware of deficiencies in auditing, and the auditing community was always quick to fix those deficiencies. Computers played an important role of changing the way audits were performed and also brought along some difficulties.