Sarbanes-Oxley Act Corporation environments are continually changing with one exception-fraud. With particular reference to public organizations, fraud has been cited as the number one cause of loss of company funds. Losses occur either through misappropriation of funds or assets, or the exploitation of poor or lack of internal controls within the company. According to NYSSCPA.ORG, “President George W. Bush signed the Sarbanes-Oxley Act ( SOX) of 2002 (Public Law 107-204) on Tuesday, July 30, 2002. Congress presented the act to the president on July 26, 2002, after passage in the Senate by a 99-0 vote and in the House by a 423-3 margin” (The sarbanes-oxley act). A new federal law was passed in reaction to corporate scandals such as the Enron, WorldCom, Tyco cases. The Sarbanes-Oxley Act puts extreme pressure on companies accounting practices and annual reports. Simply put, the act was created to protect investors from corporate corruption, and accounting misconduct. This act also created a new agency called the Public Company Accounting Oversight Board, or PCAOB. The main purpose of Sarbanes Oxley Act is to ensure that the corporate sector works with transparency and provides full disclosure of information as and when required. The transparency purpose of Sarbanes Oxley Act is fulfilled by ensuring real time disclosure of information, the adherence to guidelines of the Generally Accepted Accounting practices, full financial details being made available of all the transactions not mentioned in balance sheet. This purpose of Sarbanes Oxley Act is also fulfilled by an expanded disclosure of financial and non financial control measures in force in every company. Similarly, public certification of these internal controls and financial measures also helps fulfilled the purpose of Sarbanes Oxley Act (Bing). The objective of Sarbanes Oxley Act is to make company audit committees, the auditing profession, and corporate management work together to reduce the risk of these types of scandals recurring. Investors will have a better sense of security and confidence knowing that they are investing their money in public traded companies that uphold the rules and regulation of Sarbanes Oxley Act. Especially, people like me who are making plans to invest in the stock market in the near future. It is also reassuring that the government will hold people accountable for falsifying documents, and/or anything else that is considered illegal. The act might also put a lot of smaller companies that haven’t gone public yet on the straight and narrow path of business. In the past some companies have gone public without being financially capable of growing. Unfortunately, everybody doesn’t have the investor’s role in mind. A lot of people are not happy with the act. Section 404 of the act requires among other things, that each company’s annual report must have and assessment of the company’s internal control structure and financial report. According to The CPA Journal “Section 404 of the Sarbanes-Oxley Act of 2002 (SOX) requires management and independent auditors to report on the effectiveness of internal control over financial reporting. The concept of internal control is not new; what section 404 introduces is mandatory reports on internal control by management and independent auditors. The belief behind the requirement is that such audited reports could prevent corporate scandals such as Enron and WorldCom” (Lin, 2006). So that CEO’s and CFO’s must review and certify that internal controls are evaluated. So if anything goes wrong or becomes an issue, he/ she become held responsible because it was his/her duty to provide accurate information that was true to their knowledge. According AICPA, “The AICPA has consistently urged implementation of Section 404(b) for all publicly held companies. Section 404(b) has led to improved financial reporting and greater transparency. The AICPA believes that all investors in public companies should have
The Sarbanes-Oxley Act of 2002 The Sarbanes-Oxley Act of 2002 On July 30, 2002, President Bush signed the Sarbanes-Oxley Act of 2002 (SOX) into law, stating the legislation would be “The most far reaching reforms of American business practices since the time of Franklin Delano Roosevelt,” (Process, 2012). The Act was designed to mandate many reforms in order to require greater corporate responsibility, disclosure, transparency, and to combat against accounting fraud. In response to several…
Sarbanes-Oxley Act of 2002 James Gauck ACC/290 December 17, 2012 Susan Laymon Sarbanes-Oxley Act of 2002 On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002. The Act-which applies in general to publicly held companies and their audit firms-dramatically affects the accounting profession and impacts not just the largest accounting firms, but any CPA actively working as an auditor of, or for, a publicly traded company. The basic implications of the Act for accountants…
Introduction: The Sarbanes-Oxley Act of 2002 (SOX) is a United States federal law that set new or enhanced standards for all U.S. public company boards, management and public accounting firms. Sarbanes-Oxley introduced major changes to policies that govern publicly traded companies. The significance of SOX was to regain the communities support and trust, after several financial scandals among large corporations. In this report, we will also consider your internal controls and highlight the goods…
The Sarbanes-Oxley Act created new standards for corporate accountability as well as new penalties for acts of wrongdoing. It changes how corporate boards and executives must interact with each other and with corporate auditors. The Act specifies new financial reporting responsibilities, including adherence to new internal controls and procedures designed to ensure the validity of their financial records. The Sarbanes-Oxley Act, officially named the Public Company Accounting Reform and Investor Protection…
The Sarbanes–Oxley Act of 2002 also known as the Public Company Accounting Reform and Investor Protection Act of 2002, and simply as SOX, Sarbanes-Oxley (named after sponsors U.S. Senator Paul Sarbanes and U.S. Representative Michael G. Oxley), came as a result of several public scandals over the accounting practices of major U.S. companies including Enron, WorldCom, Tyco International, and Peregrine Systems. The Act affects U.S. publicly held companies, foreign companies registered with the SEC…
Sarbanes-Oxley Act of 2002 Research Paper Imagine over $60 billion of shareholder value, almost $2.1 billion in pension plans, and initially 5,600 jobs - disappeared (Associated Press, 2006). One would have to wonder how that is possible. These are the consequences the investors and employees of Enron Corporation endured after the Enron scandal started to unravel. This paper will focus on the infamous accounting scandal of Enron Corporation. It will also discuss how the company was…
main objective of this research topic is to gain insight in unethical accounting practice that has occurred in corporations such as Enron. Also, to examine factors that is linked to unethical behavour and professionalism. Lastly, what remedies and acts have been established to prevent these unethical behaviours from occurring again. Methodology and Sampling Secondary sources such as credible journals and books will be used in order to have accurate information. Individuals who have experienced…
SOX in the Business The Sarbanes-Oxley Act (SOX), also known as the Public Company Accounting Reform and Investor Protection Act of 2002, is a U.S. Federal law enacted on July 30, 2002 in response to a number of major corporate and accounting scandals, including most famously Enron and WorldCom. These scandals cost investors in these public companies billions of dollars when the share prices collapsed and shook public confidence in the nation's securities markets. SOX established new and enhanced…
The Sarbanes-Oxley Act had been approved in the year 2002 and the cause of the approval was in regards to the executives that were in business with the companies were not in working in good face in adhering to the stakeholders and shareholders best interests. Ultimately misrepresenting the company and what it stood for. As to be known there were a few thousand people that lost their entire savings and retirement money to illegal usage of the investments. The people who were trying to confide in these…
The Sarbanes-Oxley Act: An Ethical Perspective Presented By: • Karroll Candelaria-Bauer • Jorge Garcia • Corina Gonzales • Marisa Sanchez • Matthew Wylie November 22, 2014 Sarbanes-Oxley Act: An Ethical Perspective Contents Introduction.......................................................................................2 The Provisions....................................................................................5 The Value in Context .................................................…