Fraudulent Practices, And The Sarbanes-Oxley Act

Throughout history and in our own time, legitimate accounting methods have been utilized to fraudulently engage in manipulating activities that results in illicit gains to the perpetrators and losses to individuals and financial institutions.

Fraudulent financial reporting is one form of corporate corruption and may involve the manipulation of the documents used to record accounting transactions, the misrepresentation of accounting events or transactions, or the intentional misapplication of Generally Accepted Accounting Principles (GAAP) (Crumbley, Heitger, and Smith, 2013). Examples of fraudulent schemes befitting of this category abound and usually involve financial statement items that have been misclassified, omitted, overstated, undervalued, or prematurely recognized. One case involving CEO Bill Smith of Moonstay

The Sarbanes-Oxley Act was introduced by Senator Paul Sarbanes, a Democrat from Maryland and Congressman Michael Oxley, a Republican from Ohio. President George W. Bush signed the bill into law in July 30, 2002.

Lastly, for the portion of domestic antitrust, we will examine the Sarbanes Oxley Act. Enacted in 2002 it increases transparency in accounting. It was designed to prevent accounting errors and fraud in financial disclosures. The SOX act stipulates that the periodic financial reports be carried out in a certain way. The signing officers must review and certify the report prior to release. They are required to make sure all information is clear, true, not misleading and does not omit any important details. The signing officers are also required to evaluate the internal controls and their effectiveness within ninety days of the report. If there are any areas of internal control that are not working or may have issues they must also report this, along with any responsible employees. Finally, they must make sure the financial picture is being fairly portrayed through all of this.

These companies need to remember that these laws were enacted because they were unable to play by fair rules and saw ways to make money as the cost of the investor. To take them away now, and allow some companies that chose to go rouge again, would be a huge mistake that investors would be the one paying the price

Fraudulent activities and embezzlement are more prevalent in organizations than most people think. Because of the multitude of previous scandals, the Sarbanes-Oxley Act has required all publicly traded U.S. companies to have internal auditing and internal controls to check for fraudulent activity and embezzlement. While the Sarbanes-Oxley Act only applies to public businesses, the requirements of it should be applied to all types of businesses, even universities. In the Case of the City University of New York, having internal controls and auditing would have halted the embezzlement occurring there.

On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002, which he characterized as "the most far reaching reforms of American business practices since the time

The Sarbanes-Oxley Act of 2002 was implemented with the sole purpose of assuring the investors in the financial reporting system. One example is a case such as Phar-Mor which fabricated their inventory in most of their retail stores in order to conceal a massive fraud by the leading executives. Or the Waste Management scandal which did things such as capitalizing items which should have been left on the income statement in order to increase their assets. Lastly, Enron, which had such an elaborate scheme in place that it was hard to decipher and was only uncovered when the CEO stepped down. It is not to say that SOX could have

The Sarbanes-Oxley Act, or SOX Act, was enacted on July 30, 2002. Since it was enacted that summer it has changed how the public business handle their accounting and auditing. The federal law was made coming off of a number of large corporations involved in scandals. For example a company like Enron was caught in accounting fraud in late 2001 when the company was using false financial statements. Once Enron was caught that had many lawsuits filed against them and had to file for bankruptcy. It was this scandal that played a big part in producing the Sarbanes-Oxley act in 2002.

Fraud will always be an issue but it has been more prevalence in the past before there were any specific guidelines for business entities and accountants to adhere and conform to.

After major corporate and accounting scandals like those that affected Tyco, Worldcom and Enron the Federal government passed a law known as the Sarbanes-Oxley Act of 2002 also known as the Public Company Accounting Reform and Investor Protection Act. This law was passed in hopes of thwarting illegal and misleading acts by financial reporters and putting a stop to the decline of public trust in accounting and reporting practices. Two important topics covered in Sarbanes-Oxley are auditor independence and the reporting and assessment of internal controls under section 404.

The development of the Sarbanes-Oxley Act (SOX) was a result of public company scandals. The Enron and Worldcom scandals, for example, helped investor confidence in entities traded on the public markets weaken during 2001 and 2002. Congress was quick to respond to the political crisis and "enacted the Sarbanes-Oxley Act of 2002, which was signed into law by President Bush on July 30" (Edward Jones, 1), to restore investor confidence. In reference to SOX, penalties would be issued to non-ethical or non-law-abiding public companies and their executives, directors, auditors, attorneys, and securities analysts (1). SOX significantly transformed the procedures in which public companies handle internal

Under the Act, companies must routinely report on compliance and identify, on an ongoing basis, any problems or aberrations found with their compliance procedures. There are four specific Sarbanes- Oxley sections that relate to enterprise applications and their associated processes: PURPOSE In 2001, the United States monumentally adopted a sweeping body of reform legislation – the U.S. Public Company Accounting Reform and Investor Protection Act of 2002, known as the Sarbanes-Oxley Act of 2002. Sarbanes- Oxley initiated a host of compliance and procedural requirements.

      The Sarbanes-Oxley Act (SOX) was enacted in July 30, 2002, by Congress to protect shareholders and the general

This paper provides an in-depth evaluation of Sarbanes-Oxley Act, which is said to be promoted to produce change in the corporate environment, in general, by stressing issues of public accountability and disclosure in the financial operations of business. It explains how this is an Act that represents the government's and the Security and Exchange Commission's concern in promoting ethical standards in terms of financial disclosure in the corporate environment.