Question

The importance to the accounting profession of the Foreign Corrupt Practices Act of 1977 is that?

1) bribery will be eliminated
2) management will not override the company's internal controls
3) firms are required to have an effective internal control system
4) firms will not be exposed to lawsuits

Answer 1

The Foreign Corrupt Practices Act of 1977 is important to the accounting profession because it mandates firms to have an effective internal control system.

Step-by-step explanation:

The importance of the Foreign Corrupt Practices Act of 1977 to the accounting profession is that it requires firms to maintain an effective internal control system, which helps prevent accounting fraud and increases the reliability of financial reporting.

This act came before the Sarbanes-Oxley Act of 2002, which was a response to a series of major accounting scandals with the goal to further protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes.

The requirement for an effective internal control system under the Foreign Corrupt Practices Act helps ensure that companies operate with integrity in the global business environment and comply with anti-corruption laws, thereby also protecting them from potential lawsuits related to non-compliance.