Paper Topic:

accounting

Running head : US SEC V . CARDINAL

United States Securities and Exchange Commission v . Cardinal Health Inc

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School

Professor

Course

United States Securities and Exchange Commission v . Cardinal Health Inc

Issue

Did the Cardinal commit irregularities and accounting fraud in its financial statements

Rule of Law

Basically , corporations are mandated to comply with the Generally Accepted Accounting Principles (GAAP ) in all their financial and accounting activities . The GAAP embodies the common set of principles standards , and procedures that govern companies in compiling their

financial statements (Ruppel , 2004 . Purposely , the GAAP is established to guide the accountants in classifying different financial transactions made by the companies . Because of various financial transactions from different financial institutions such as suppliers , customers , debtors and creditors , accountants need to follow rules , procedures , and guidelines for them to make an accurate accounting of transactions and present standardized financial statements . Every transaction has different accounts . These accounts , in turn , are reflected in the financial statement of the companies

Another law significant to this case is the Securities Exchange Act of 1934 , particularly Rule 10b-5 which pertains to the employment of manipulative and deceptive devices for the purpose of defrauding transaction in connection with the purchase or sale of securities (University of Cincinnati , 2008 . Under this Act , the Commission has found the basis of litigation in Rule 13 thereof in reporting fraudulent statements , books , and other internal control violations . Also relevant to this case is the Securities Act of 1933 , specifically Section 17 thereof which encompasses fraudulent acts...

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