Lge 500 Week 10 Discussion 1&2 Essay

2300 Words Aug 21st, 2013 10 Pages
"Underlying Causes" Please respond to the following:
Analyze at least three underlying causes for the creation of the Sarbanes-Oxley Act. Next, rank the causes that you have analyzed from the most important to the least important to the creation of the Act. Explain your rationale.

In the later part of 1990s, there was an epidemic of accounting scandals which arose with the disclosure of financials transgressions by trusted corporate executives. The misdeeds involved misusing or misdirecting funds, understating expenses, overstating the value of corporate assets or underreporting the existence of liabilities, and overstating of revenues.
Some of the companies involved in the creating accounting practice in the late 1990s and early
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There were a lot of pointing fingers in the accounting scandals that plagued the economy in the 1990s within the companies involved. Congress decided to hold the CEO and CFO responsibility for any financial misreporting. This made the third most important causes of creating SOX.

Determine three most important provisions of the Sarbanes-Oxley Act. Provide a scenario or example of each to justify why each provision that you determined is important

Sarbanes-Oxley was motived by the never-ending waves of corporate financial scandals by Enron, Arthur Andersen, WorldCom, Waste Management, Global Crossing etc. There are 11 sections in the act. There following are the three (3) most important provision in the Sarbanes Oxley Act due to the simple fact that The US Congress were trying to enact a law to combat corporate fraud and misleading of investors:
The three (3) most important provisions of Sarbanes-Oxley include: * Creation of PCAOB * Auditor independence and a prohibition on audit firms offering value-added (read "conflict of interest") services * Certification of financial reports by CEOs and CFOs

First, Congress saw the need to create an independent body to oversee the audit of public companies that are subject to the securities laws. PCAOB was established to protect the investors and further the public interest in the preparation of informative, accurate, and independent audit reports for public companies. Before the SOX, The
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