The Sarbanes Oxley Act Of 2002

Having internal controls is one thing, but how the company evaluates that control is a matter all by itself. Being an independent auditor, it is our job to understand an entity and

Internal control is one of the integral parts of an organization. It is a system which controls different types of risks,

(TCO 5) Internal Controls are required to safeguard assets and to ensure ethical business practices. (1) Identify and explain the reason for any two of the seven internal control procedures (10 points) and (2) provide examples of how your two selected internal control procedures will meet the goal of safeguarding assets and promoting ethical business practices. (15 points) (Points : 25)

Accountability is a critical factor for all public and private companies. In public companies accountability increases, public confidence in the board of management entrusted with a corporation. However, lack of accountability and transparency leads to loss of public confidence in the management of any entity. To this end, the state provides the legislative framework that ensures accountability and transparency prevails in public entities (McNally, 2013). Thus, the role of government is to ensure public companies are managed in a transparent and accountable manner as a way of attracting more investments and retaining public confidence. Sarbanes-Oxley Act is a law in the United States enacted to ensure public companies adhere to transparent standards of accounting in resource usage. The act

So what are internal controls? And why are they so important? Internal controls describe the policies, plans, and procedures

One of the advantages of SOX was the improvement on and expansion of corporate disclosures, including but not limited to, audit committee independence, off-balance assets and liabilities and any commitments or contingencies (Akhigbe & Martin, 2005). Prior to SOX public companies could manipulate their financial statements to, among other things, increase the value of their stock. The additional disclosure requirements resulted in greater transparency of financial statements and shareholders would now have information deemed necessary

In the wake of the major financial scandals, that occurred in 2001 and 2002 the United States Congress passed the Sarbanes Oxley Act (SOX) of 2002. These financial scandals adversely affected the public’s trust in the stock market, therefore passing the SOX helped investors to regain trust in investing in the stock market. Prior to the SOX being passed “neither management or auditors of publicly traded companies were required to evaluate, audit, or publicly report on the effectiveness of internal controls over financial reporting” (Kinney & Shepardson,

of internal controls are (1) to safeguard assets and (2) to ensure reliability of the financial

The Sarbanes-Oxley Act of 2002 was a piece of legislation enacted by the United States Congress with the intent “to improve corporate governance and restore faith of investors” (Hanna, 2014). I have studied this act in my accounting courses, and the primary reason the act seems to have been implemented is due to the various accounting scandals involving major corporations at the time, such as Enron and WorldCom (Hanna, 2014). The United States economy was still recovering from the dot-com bubble that burst in the late 1990s (Hanna, 2014), and a mild recession that occurred during 2001. Thus, the major accounting scandals that were causing large corporations to fold further shook investor confidence. In my opinion, if it weren’t for this act, many investors would have abandoned the stock market permanently or at least restricted their investments to highly conservative blue chip companies, hindering the ability for other companies to raise capital for growth.

Internal controls represent an organization’s processes and procedures used to meet its goals and objectives and serve as a defense in safeguarding assets and preventing and detecting errors, fraud, and abuse. Effective internal controls provide reasonable assurance that an organization’s objectives are achieved through (1) reliable financial reporting, (2) compliance with laws and regulations, and (3) effective and efficient operations. The passing of the Sarbanes-Oxley Act of 2002, as well as the numerous corporate frauds and bankruptcies over the past decade—including some

This research paper endeavors to expose how the Sarbanes- Oxley Act of 2002 might have led to the accountability of holding corporate executives for their actions in the past and also in the future. The paper will examine and explore the genesis of the Sarbanes-Oxley Act as well as give details on the act’s relationship to the ethics of the institution and the persons who work and manage the institution. The paper also proceeds to discuss different corporations around the globe that have been endorsed with the Sarbanes- Oxley Act and their subsequent benefits and demerits as opined by different individuals. The paper shall prove to be a relevant tool for any administrator managing a public company. Anyone going through this

Ethics played a big rule or rather the lack thereof played a big role in the formation of SOX. When faced with ethical decisions many “gatekeepers” hopped to go the other way. There are advantages and disadvantages that exist with SOX as with all new law. Clearly, there are no easy fixes or one size fits all solutions to the issues that plaque the financial world but SOX makes an attempt at eradicating or lowering the occurrence of fraud. Many would agree that this is one of “the most far reaching laws since the Securities and Exchange Act of 1934” (Jahmani and Dowling, 2008, p. 56). Some advantages of SOX cited by Jahmani and Dowling are as follows: restoring public confidence in capital markets, strengthening corporate accounting controls, standardized key financial processes, elimination of redundant Information Systems, better internal controls, clarify the relationship between auditing firms and public companies, increased independence between board of directors and management, and increased

The Sarbanes-Oxley Act (SOX) was enacted in July 30, 2002, by Congress to protect shareholders and the general public from fraudulent corporate practices and accounting errors and to maintain auditor independence.   In protecting the shareholders and the general public the SOX Act is intended to improve the transparency of the financial reporting.   Financial reports are to be certified by the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) creating increased responsibility and independence with auditing by independent audit firms. In discussing the SOX Act, we will focus on how this act affects the CEOs; CFOs; outside independent audit firms; the advantages and a

The final responsibility for the integrity of an SEC registrant’s internal controls lies on the management team. U.S. companies need to refer to a comprehensive framework of internal control when assessing the quality of financial reporting to determine that financial statements are being presented under General Accepted Accounting Principles, GAAP. The widely used framework is referred as COSO, Committee of Sponsoring Organizations of the Treadway Commission, sponsored by the following organizations American Accounting Association, the American Institute of CPA’s, Financial Executives International, the Institute of Internal Auditors, and the Institute of Management Accountants. COSO’s defines internal control as:

The Sarbanes-Oxley Act of 2002 (SOX) was enacted into law in 2002 in the wake of corporation financial reporting scandals involving large publicly held companies. SOX instituted new strict financial regulations with the intent of improving accounting practices and protecting investors from corporate misconduct. SOX requires corporate executives to vouch for the accuracy of financial statements, and to institute and monitor effective internal controls over financial reporting. The cost of implementing an effective internal control structure are onerous, and SOX inflicts opportunity costs upon an enterprise as executives have