The accounting regulation environment took a major turn in the beginning of the 2000s following a number companies’ accounting misconduct. In the 2002, the Congress enacted the Sarbanes-Oxley Act to address the US public companies auditing. Sarbanes-Oxley is consistent with the law official name which is Public Company Accounting Reforms and Investor Protection Act. It developed a quasi, unique public institution to regulate and oversee the Public Company Accounting Oversight Board (PCAOB). This was basically done to protect investors and the general public from accounting frauds which had widely extended in the country (Coates, 2007). This paper focuses in evaluating the regulatory environment in Walmart Stores Inc. with regard to the Public Company Accounting Oversight Board (PCAOB).
Regulation to Apply to Walmart Stores Inc
Walmart Stores Inc. is a multinational American based retail corporation which operated hypermarket chain, grocery stores, and discount department stores. It was incorporated in 1969 and turned to be publically traded in 1970. In this regard, Walmart is highly impacted by Securities Exchange laws. Some of the security exchange regulations that would apply in the Walmart include having an independent auditing committee that is required to oversee the auditing process in the firm. According to rule 16b-3 of the security and exchange commission enacted under 1934 Act of Security Exchange, two members must qualify as non-employee director, and each member of the committee must be affirmatively determined by the full Board majority vote to stand as independent, and two more members must qualify as non-employee directors (Stock.Walmart, 2016). The company must also develop accurate, timely, and informative financial reports to the investors and the general public before the selling of any securities according to section 15 (d) and section 13(a) of the 1934 Act of Security Exchange. Thus, the company must employ qualified accountants and auditors to ensure the accuracy of its financial reports (Sec.gov, 2002).
Why the Compliance to the Regulation is of Benefit to the Company, Industry, and Consumer
The reinforcement of the accounting regulations mainly focused on eliminating accounting fraud which was basically meant to deceive investors. The accounting regulation thus focus on preventing companies from benefiting from accounting fraud and failure to comply results to enactment of the legal proceeding, revocation of licensing, and destruction of the company’s reputation. Thus, comply will benefit the company by eliminating the use of its resources in fighting legal battles, protecting the company’s image, and it also gives the company the assurance of operating smoothly without fear of legal entanglements that would initiate the revocation of the company’s licensing. These regulations also ensure the company managers receive accurate report that honestly displays the financial position of the company, together with genuine, professional auditors’ opinion regarding the company’s financial position. This ensures that the management is able to make sound decisions in enhancing the company’s financial situation through other organization’s operations (April, 2003).
The regulation compliance also has great benefit to the retailing industry. It ensures that there is healthy competition in the industry. No companies are highly probable to manipulate their financial reports to move to the top in the securities exchange market, as it was before. Thus, companies in the industry compete based on their actual financial and operation ability. This also gives young companies in the industry an opportunity to grow based on their financial records. Security exchange highly determines the company’s worth. Attraction of more investors gives the company enough finances to boost its operations. This can highly result to improvement of product quality or reduction of prices, creating unhealthy competition in the market, particularly for the growing companies. With regulation, this can only be attained by deserving companies, and with equal competitive ability, companies stand a chance of attracting investors at the same rate.
Regulation also plays a major role in protecting consumers from any form of exploitation, particularly in product pricing. The companies’ inability to overvalue themselves in the market protects customers from buying the companies goods at higher prices or even thinking that their products are of higher quality than others. Thus, they are able to product choices without deception and based on their taste and preferences.
How do the Agency and Walmart Stores Inc Work Together
The PCAOB have an indirect connection or relationship with Walmart. PCAOB works directly with auditing companies to ensure that they produce genuine financial audit reports that clearly state the actual financial condition of the company. The board supervises the operation of auditors who work directly to the company. Thus, the agency ensures effective financial accounting and reporting by ensuring that auditors carry their role effectively. This makes auditors to ensure that the accountants employed in the company comply, failure to which they are uncovered. Moreover, the agency provide auditors analysis report which guides the company in selecting the most professional and competent auditing firm that will assist it to attain its financial goals (April, 2003).
Role of Ethics in the Regulatory Environment
Regulatory environment ethics focus on defining the behavior or conduct of the accounting body. Ethics ensure that all accountants, auditors, and their supervisors behave in a defined manner failure to which they are punished or disciplined as per the defined principles. This increases the regulatory environment ability to implement the required rules and regulations in accounting. It also enhances effective performance of all individual working under the accounting regulatory to work with high level of diligence, intelligence, and honesty.
Read also Regulatory and Compliance Issues – PCAOB
Code of conduct defines the accounting participants anticipated behavior, thus making it easy to evaluate and identify individuals involved in misconduct. It also defines on the best methods of disciplining such individuals, making it easier to instill law and order in the regulatory environment. This also ease the compliance process since, the consequences of lack of compliance can easily be seen. It has also enhances high level of compliance in the accounting and auditing process (Senaratne, 2011).
How the Regulatory Environment Would Directly Affect My Role in the Company
I would like to work in the Walmart Stores Inc. in the future as their senior accountant. The regulatory environment will directly affect my role in the company by demanding that I should produce the financial reports of the company in an accurate, timely and informative manner, particularly when the company wishes to sell its security in the market. The regulatory will demand that my work be assessed by an internal and independent auditor, and I have to comply by submitting my work for auditing in a regular basis based on the auditors demand. I may also find myself being evaluated and investigated by based on the regulatory required as per my work conduct.
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