Due to financial collapses of Enron, Global Crossing, WorldCom and more, accounting issues have risen. Proposals have been made to improve accounting and financial disclosure. In December 2001, deceptions that were contained in Enron's financial reports brought the downfall of the company. There has been a lack of confidence amongst investors and the American stock markets. Most investors of Enron thought this would be shored lived but further accounting irregularities were topped of by WorldCom and MCI. WorldCom announced the misreporting of $5 billion of operating losses as capital expenses. WorldCom filed for bankruptcy protection topping Enron as the nations' largest corporate bankruptcy. Because of this, corporate accounting reforms have been passed. In 2002, the House passed a bill that tightened corporate accounting and auditing rules. In 2002, there was a Senate bill that made securities fraud a criminal offence and prison sentences for many types of business related frauds. Before going to conference on these two bills, the House adopted the Corporate Fraud Accountability Act of 2002. This became known as The Sarbanes-Oxley Act. On February 18, 2003, President Bush swore in William H. Donaldson as the new Chairman of the SEC. Chairman Donaldson's job is to make sure America's public corporations behave more ethically than required by law.

According to an article in the November 14, 2005 edition of Business Week, House Financial Services Committee chairman, Michael Oxley, announced his retirement. Some businesses will try to bring down the legislation that bares his name. Companies complain about costs and say the Sarbanes-Oxley law gives government enforcers too much leverage in probes of corporate wrongdoing. This law was designed to lower public anger at the sight of public scandals. But they felt they needed to do something to show they cared about the crimes. Now with Oxley and Senator Sarbanes retiring in 2006, some business lobbyists have a good chance to talk about repealing the act. Representative Richard Baker (R-LA), is a close Oxley ally. He is sometimes known to be a thorn in Wall Street's side. Baker would like to try to reform Fannie May and Freddie Mac in order to keep an eye on financial institutions and how they do their business. So apparently, the war on accounting reform is not over.

Accounting reform is an expansion to accounting rules that goes beyond what is required by law for both individual and national economies. It is advocated by those who think present practices and standards are inadequate. Financial activities, successes and failures should be reported by not only modern enterprises but also by the government. Accounting reform is basically about accountability. The Sarbanes-Oxley Act was passed in 2002 but more recently, the SEC approved the Public Company Accounting Oversight Board's standards on how accounting firms must be honest to the accuracy of the management's evaluation of the company's internal controls. The auditor has to evaluate management's assessment process to be satisfied that management has come to terms with the investor. The auditor must test and evaluate both the design and the operating effectiveness of internal control to be satisfied that management's conclusions are correct. Some corporations oppose this because it is expected to increase auditing costs. The PCAOB says it has no intentions to make changes in the auditing standards; they just want to strengthen the system of financial reporting.