Question

Sharon, who works in accounting, noticed that the accounting records of her firm drastically overstated the amount of inventory on hand, which led to overstating the assets of the firm. She thought carefully about calling a government official to report this and in the end decided to do it because she would be protected by the:

Answer 1

Answer:

Sarbanes - Oxley Act

Explanation:

The Sarbanes - Oxley Act was passed into law by the United States Congress July 30th 2002 basically to provide protection for investors against financial reporting that are fraudulent by corporations. This law was enacted as a result of the cases of financial scandals that shook large companies including Enron Corporation around the year 2000.

The order to protect the investors from fraudulent reporting, the act also protects accounting officers such as Sharon who become whistle-blowers by reporting the malpractices and unethical accounting practices of corporations to the government for actions and sanctions.