A Brief Note On Sarbanes Oxley Act And Its Effect On Success

1020 Words Dec 12th, 2015 5 Pages
Although this law has key advantages, there are also some disadvantages. On of its biggest problems is that it can be very expensive. A lot of reserves need to be involved, that is a lot of money goes into simply following the practice. In order to fulfill these set rules, businesses have to pay a large sum of money. Though there are severe rules with this legislation, there is no supervision set forth as to how a firm should apply these practices. Every business has to put forward their own technique into place. In order to do so, the company has to spend a great amount of money towards success. This can harmfully affect an investor in the long run. When a business unexpectedly has a large, new expense to oversee, they will need to figure out some way to get those funds. The investors are the ones that are going end up paying for it in the long. Plus, these expenses will take a toll on the company’s profit. Furthermore, Sarbanes-Oxley Act requires that public corporations have yearly audits to be performed by an independent accounting firm. These audits can cost the business thus creating higher auditing and accounting fees, which requires the business to adjust its budget in other to accommodate these services.
This means that money will be taking from other place within business. This will also negatively affect the profits of the company overall. It could theoretically affect several estimates that are used to decide the success of the business and make it seem like a…
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