Overview of the Sarbanes-Oxley Act

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Sarbanes-Oxley Act Introduction The Sarbanes-Oxley Act was signed into law on July 30, 2002, by President George W. Bush; it was a congressional regulatory response to the enormously damaging corporate scandals at WorldCom, the Arthur Anderson accounting group and most notoriously, Enron. Because of the damage done not only to the reputations of those corporations and to the American corporate community but also to the stockholders and people who lost life savings (people who lost 401-K investments in the scandal), Congress had to take action to try and avoid scandals like these in the future. Hence, the Sarbanes-Oxley Act was created and passed into law. Will it deter future criminal activity vis-à-vis corporate financial reporting? There is no guarantee that the Act will prevent future corruption, but this paper asserts that the Sarbanes-Oxley Act is a step in the right direction. The Sarbanes-Oxley Act created the Public Company Accounting Oversight Board which now oversees the accounting industry. As a result of the Act "…auditors were prohibited from doing consulting work for their auditing clients" and the Act banned "…company loans to executives" and gave "…job protection to whistleblowers" (Amadeo, 2013). Specific Sarbanes-Oxley Requirements for Corporations Section 302 of Sarbanes-Oxley refers to the actual financial reports that corporations are obliged to provide. By signing a financial report, the executive officers of a corporation are certifying that:
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