Bemoaned As A Burden Summary

Passed in the wake of last year's corporate accounting scandals, the Sarbanes-Oxley Act requires public companies to disclose more financial information than in the past, and it holds corporate directors and officers more accountable for the accuracy of disclosures than ever before. Sarbanes-Oxley also requires companies' top officers to assess and certify the effectiveness of the internal controls they use for financial reporting.

The Sarbanes-Oxley Act of 2002, also known as SOX in short, is a U.S. Federal Law passed by President George Bush. The main reason behind passing of the law was that the government needed improved regulations mandating upper management to confirm the reliability and transparency of the financial statements. This bill came about because of the failure and malpractice by companies such as Enron, WorldCom, Adelphia, and Arthur Anderson. These companies caused a major scandal where investors lost billions of dollars resulting in the public losing confidence in the U.S. Securities Market. “The Act mandated a number of reforms to enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud, and created the Public Company Accounting Oversight Board, also known as the PCAOB.”[1] The act includes 11 sections that are enforced by the Securities and Exchange Commission.

The Sarbanes-Oxley Act was passes in 2002 in response to a handful of large corporate scandals that occurred between the years 2000 to 2002, resulting in the losses of billions of dollars by investors. Enron, Worldcom and Tyco are probably the most well known companies that were involved in these scandals, but there were a number of other companies guilty of such things as well. The Sarbanes-Oxley Act was passed as a way to crackdown on corporations by setting new and improved standards that all United States’ public companies and accounting firms were and are required to abide by. It also works to hold top level executives accountable for the company, and if fraudulent behaviors are discovered then the executives could find themselves in hot water. The punishments for such fraudulence could be as serious as 20 years jail time. (Sarbanes-Oxley Act, 2014). The primary motivation for the act was to prevent future scandals from happening, or at least, make it much more difficult for them to happen. The act was also passed largely to protect the people—the shareholders—from corporations, their executives, and their boards of directors. Critics tend to argue that the act is to complicated, and costs to much to abide by, leading to the United States losing its “competitive edge” in the global marketplace (Sarbanes-Oxley Act, 2014). The Sarbanes-Oxley act, like most things, has its pros and cons. It is costly; studies have shown that this act has cost companies millions of

The Sarbanes Oxley Act of 2002, better known as SOX, was passed in response to the scandals that had plagued many companies, from WorldCom to Enron, in the US. SOX was intended to restore investor confidence, decrease fraud and mismanagement while enhancing transparency and corporate governance (Ernst & Young). With the passing of SOX, the Public Company Accounting Oversight Board (PCAOB) was established to oversee the auditing firms that allowed, whether knowingly or not, these companies to commit fraud and fraud the American people out of their life savings (Harris). With all laws, there will always be some successes and failures. With that you will also have some who feel the law needs to be repealed or be reevaluated to decrease the

The Sarbanes Oxley Act of 2002 was created to extinguish doubts on the financial system that were introduced during the financial collapse of Enron, a resource trading company that was brought to its need by corporate greed and corruption. Enron’s downfall could have been avoidable should there have been any transparency into the finances of the company for the shareholders. It was for this fact that the Sarbanes Oxley Act introduced many new factors of protection for transparency, separation of duties and tougher penalties for those who violated investor trust. All of these facts will be reviewed and discussed to show their impacts on businesses still functioning today.

Preceding the implementation of SOX, “auditors were subject only to state licensing and lightly enforced self-regulation” (Coates and Srinivasan 629). The only regulation in a preSOX economy was a “part time Public Oversight Board” that “oversaw auditors, but was dominated by audit firms and had little authority” (Coates and Srinivasan 629). This meant there was very little corporate governance and transparency in public firms. The rules that SOX instigated were designed to put an end to the unregulated auditing process.

Sarbanes-Oxley came into being due to the corporate accounting scandals in the early 2000’s. With the occurrence of the first corporate scandal of Enron and Arthur Andersen in late 2001, Congress did little. With the second wave of scandals which included WorldCom and Adelphia, the stock market continued to plunge which resulted in billions of dollars of corporate

It has been a decade since the Sarbanes-Oxley Act became in effect. Obviously, the SOX Act which aimed at increasing the confidence in the US capital market really has had a profound influence on public companies and public accounting firms. However, after Enron scandal which triggered the issue of SOX Act, public company lawsuits due to fraud still emerged one after another. As such, the efficacy of the 11-year-old Act has continually been questioned by professionals and public. In addition, the controversy about the cost and benefit of Sarbanes-Oxley Act has never stopped.

In July of 2002, Congress swiftly passed the Public Company Accounting Reform and Investors Protection Act at the time when corporations like Arthur Anderson, Enron and WorldCom fell due to fraudulent accounting practices and bad internal control. This bill, sponsored by Mike Oxley (R-OH) and Paul Sarbanes (D-MD), became known as Sarbanes-Oxley Act (SOX).It sought to restore public confidence in publicly traded companies and their accounting practices, though the companies listed above were prosecuted on laws that were already in place before SOX. Many studies have examined the effects of SOX on corporations in the past eleven years. The benefits are hard to quantify and the cost are rather hard to estimate including the

The Sarbanes-Oxley Act of 2002 was created and implemented specifically following the large corporate scandals involving Enron and WorldCom in 2002. The internal auditing was very poor for the corporate giants and they basically performed however they chose. The Sarbanes-Oxley Act caused the corporations to modify their auditing schemes, the compliances became stricter, and the complaints about the new act grew large in numbers. The corporate managers’ focus on increasing their cash flow and expanding their budget was more like an epidemic instead of an honest job duty (Ferrell, Hirt, & Ferrell, 2009).

The Sarbanes-Oxley Act also helped managers see that their companies had many weaknesses, such as “lack of enforcement of existing policies, unnecessary complexity, clogged communications, and a feeble compliance culture” (2006), per the Harvard Business Review. Managers and executives could recognize their company’s weaknesses because SOX requires publicly traded companies to be standardized. Section 302 explains the corporate responsibility behind the financial reports, such as how the CEO and CFO must be involved in the auditing process and how they must report any fraud that they see in the reports. This section forced managers to overlook their internal audits and therefore helped them to see what needed to be done to improve the financial

The Sarbanes-Oxley act was enacted in 2002 as a United States federal law that changed the regulations and procedures of management and public accounting firms, and all U.S. public company boards. The act was created in response to the major scandals in corporate and accounting corporations. Sarbanes-Oxley over the years has implemented new sections and regulations. The act specifically requires that the management of public companies assess the effectiveness of the internal controls to ensure that it will not affect financial reporting (Kravitz, 2012). Section 404 of the Sarbanes-Oxley Act specifically requires “a publicly-held company’s auditor to attest to, and report on, management’s assessment of its internal controls”. (Kravitz, 2012) This has helped many publicly companies (especially small ones) to improve their financial reporting and transparency.

It is clear that the bringing about of the Sarbanes-Oxley Act followed up one of the rougher times in US corporate history. The public downfall of the large companies like Enron and WorldCom damaged any trust in US corporations and it cost investors many billions of dollars. It even led to the destruction of one of the largest accounting firms in the US, Arthur Anderson. Sarbanes-Oxley Act was the response that the government gave in hopes that by mandating that companies report honest, accurate, and valuable financial records, it will renew investor’s trust in public corporations (Stults, Gregg).

The proceeds of the preliminary of SOX and also the increase essential of company governance within the many likenesses, there has been the formation of new restrictive agencies. Existing restrictive agencies were made two administer the audit of public firms. There 'll presumably be additional restrictive investigations by the SEC as a result. The SOX legislation has been designate two forestalled and establish several of the recent frauds operation organizations and their investors. As an issue, the audit profession can all over again gain numbers, but This point the role and methodology of the interior audit, perform can modify for satisfy necessities of the new legal mandates.

The Sarbanes-Oxley Act came about as a way to try and get the trust restored in the stock markets so that people will feel comfortable even after all of the scandals. The Sarbanes-Oxley Act is the first act to attempt restoration from the corporate scandals committed with hopes to restore everyone’s confidence in the stock markets. The Sarbanes-Oxley Act of 2002 (SOX) is a very important part of the new legislation that affects how