ACC 561 Week 2 Individual Assignment Sarbanes Oxley Act Of 2002

1432 Words Apr 5th, 2015 6 Pages
Sarbanes–Oxley, Sarbox or SOX, is a United States federal law which was introduced in 2002. It is also known as the “Public Company Accounting Reform and Investor Protection Act” and “and 'Corporate and Auditing Accountability and Responsibility Act”. The main objective of the act is to protect investors by improving the accuracy and reliability of corporate disclosures. New aspects are created by SOX act for corporate accountability as well as new penalties for wrong doings. It was basically introduced after major corporate and accounting scandals including the scandals of Enron, WorldCom etc so that the same kind of scandals do not repeat again.
There are 11 titles on the act. Each title consists of several sections. The Securities and
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This act also sees Failure of corporate officers to certify financial reports as criminal offense.

10. Corporate Tax Returns:
This title defines the sense of the Senate that the chief executive officer of a corporation should sign the Federal income tax return of a corporation.
11. Corporate Fraud Accountability :
This title is also called the ‘‘Corporate Fraud Accountability Act of 2002’’. This title has a section that gives temporary freezing authority to Securities and Exchange Commission. It also includes amendments to federal sentencing guidelines and authority of commission to prohibit person to serving as officers or directors. Increased criminal penalties under securities and exchange act are also described here.

This act was named after U.S. Senator Paul Sarbanes and U.S. Representative Michael G. Oxley. The act was introduced due to several reasons including auditor’s conflict of interest, analyst’s conflict of interest; inaccurate banking practices etc provide measures to deal with these problems.

Effectiveness of SOX in avoiding future frauds:

In improving a publicly traded company’s bottom line Sarbanes-Oxley can be a positive factor. By introducing ethics codes and internal controls and building an ethical mind-set in a

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