Discussion Need and 3 responses for students work

Report_FinancialAcumenandSarbens-Oxley.docx

Home >Business & Finance homework help >Management homework help >Discussion Need and 3 responses for students work

Running head: FINANCIAL ACUMEN AND SARBANES-OXLEY 1

FINANCIAL ACUMEN AND SARBANES-OXLEY 1

Financial Acumen and Sarbanes-Oxley

Every organization has its own financial goal in improving financial standards of the company by trying to analyse the previous and existing financial standings of the company. There should be a thorough clarity and knowledge in understanding and dealing with any business situation, for which the knowledge in financial acuity is very critical and important in today’s world in running successful business.

Fulk, M., Watkins, K., Grable, J., & Kruger, M. (2018). Who Changes Their Financial Planner? Journal of Financial Planning, 31(8), 48–56. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&AuthType=sso&db=buh&AN=131004968

This is a very interesting article that helps in understanding the need in changing the financial planners based on the factors such as marital status, inheritability etc., In this article the author describes a great wealth transfer of $30 trillion in assets from the family to their younger generations. Therefore, financial planners believe that there might be a possibility of change in the financial planning and planners for the amount of wealth inherited. It is interesting to note the fact the authors mentioned in their paper of those families or individuals with high income are willing to pay more for their financial advising and planning. In a nutshell, from this paper it is understood that financial planning is a help-seeking behaviour where the individuals seeks advise based on their assets and income for their future savings and investments. Those who seek help with their finances from a financial advisors and planners tend to me more confident and carry less regret or disappointment over the decisions made.

The main aim of this paper is to understand how individuals with a good house-hold income make decisions in choosing/changing their financial planners and advisors and what are their outcome using financial help. The methodology used in this study is simple as they had set up questionnaires to individuals based on certain criteria based on the financial health and background. The results indicated that people who often changed their financial advisors or planners are from (i) wealthy background, who had more financial capacity, (ii) older, (iii) individuals with good financial capacity tended to be remained divorced or widowed. These individuals who fell under this category have also exhibited high levels of financial acumen and confidence over the years with good investments and savings. The results also indicated that these individuals pick/choose or change their financial planners based on the practice management based on the accuracy of judgements and evaluations their planners give based on future investments.

Tabbush, V. (2018). Understanding Costs: How CBOs Can Build Business Acumen for Future Partnerships. Generations, 42(1), 61–64. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&AuthType=sso&db=slh&AN=129298601

In this article the authors indicate how financial acumen affects the business decisions especially community-based organizations otherwise called as CBO which required accurate assessments on cost benefits. As earlier mentioned in my discussion of the importance of financial acuity in business health it is essential that the decisions made based on the company’s financials will have a direct effect on the management decisions. Therefore, in this paper the authors discuss on cost-benefits in a business as to which/what costs ate relevant and contribute in financial and business decisions and how can they be assessed/analysed/changed or shaped in making wiser choices on the company’s health.

It is vital for CBOs to compare and contrast their financial expenses because they ‘express costs by the specific service line or program that triggers them’ as mentioned in this paper. Therefore, for small-scale developing organizations, variable costs could be very rough due to the unexpected rise in number of volume-based activities. So, when there exists fixed costs CBOs can have good chance in capturing financial benefit that help in company’s growth. For the growth of organizations such as CBO, the authors in this study emphasize the importance of the financial management to distinguish between the fixed and variable costs in their contract-year program by volume and cumulative experience which in the long run is an important aspect in determining and building CBO’s business acumen.

Kess, S., & Mendlowitz, E. (2015). Personal Financial Planning for Business Owners. CPA Journal, 85(9), 60–61. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&AuthType=sso&db=buh&AN=111560210

In this paper the authors establish the fact of how the business owners have difficulty in planning their finances. Individuals holding or running a business should always be cautious with the cash flow as it helps them to look back to their savings giving a potential chance for investments and taking the business to the next level. Thus, having a solid financial planning would help them analyse the personal choices of the business owners on what they can be afforded when retired. There would be multiple instances where the clients would need a good financial planners and advisors. Therefore, in this paper the author suggests that CPA financial advisors would help in analysing the client’s issues in their business in-turn helping them realize the true value of the trusted advisor in their business acumen.

Sarbanes-Oxley Act

In the year 2002, U.S senate Paul Sarbanes of Maryland and U.S representative Michael Oxley of Ohio co-authored this act after realizing the series of large failures and prolonged period of scandals of the public companies such as Tyco and Worldcom (Slaughter,2016). This act was mainly created to help in protecting the employees, public, entrepreneurs, shareholders from fraudulent activities that happen in financial practices. This act is commonly referred to as the SOX act, which helps in financial transformation by strengthening the audit committees performing and conducting those tests and analysis in providing accuracy of the financial statements. This act has very strict margins that serves in tightening the security procedures by preventing fraudulent activities happening in the accounting firms (Blokhin, 2019).

This complex lengthy piece of this legislation act has some internal controls and measures that demands these public companies to comply with the standards. This gives a two-part effect in the market for investors. The authors of the bill intend to protect the individual investors by giving them the confidence in the previously broken market also by cutting short those opportunities for those companies that are prone to exhibit fraudulent activities (Slaughter, 2016).

Overall analysis of this SOX act pertaining to the US economy and growth still remains a bit neutral exhibiting advantageous and disadvantageous of the growth in US economy. In a way bringing this act would help the companies to have a transparent financial statement by keeping the business on-track while creating a huge disadvantage to the small-scale and developing companies when not complying with the SOX standards and the internal control structures (Big, 2018).

References

Big, S. (2018, June 18). The Sarbanes-Oxley Act and It's Effect on American Businesses. Retrieved from https://myventurepad.com/the-sarbanes-oxley-act-and-its-effect-on-american-businesses/.

Blokhin, A. (2019, January 6). The Impact of the Sarbanes-Oxley Act of 2002. Retrieved from https://www.investopedia.com/ask/answers/052815/what-impact-did-sarbanesoxley-act-have-corporate-governance-united-states.asp

Slaughter, J. (2016, October 26). The Impact of the Sarbanes-Oxley Act on American Businesses. Retrieved from https://smallbusiness.chron.com/impact-sarbanes-oxley-act-american-businesses-1547.html.