Sarbanes Oxley Act 2002 An Introduction

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1|Page Sarbanes Oxley Act 2002 An Introduction: Growth in the business world is the main goal of every business in todays world, but growth should add value to the business and the investors. Companies like Enron and WorldCom, which made profits through accounting scandals, fraud, and an accusation of the limited disclosure by the company to its investors, improper corporate governance and insider trading collapsed and wiped off the entire investment of the investors. This led to the birth of Sarbanes-Oxley Act 2002 on July 2002 under the President George W. Bush with the primary objective of protecting the investors through full disclosure, accountability of management and internal control system along with strict rules in auditing (SEC, 2009, p. 1). It entirely focuses towards the behavior of corporate and the securities industry in order to avoid the corporate scandals (SEC, 2009). Section 404: Section 404 is the main section dealing with the internal control and more concern arises with the increased cost associated in fulfilling the requirements of SOX 2002. Section 404 main aim is in regaining the investors confidence by boosting the internal controlling system of the company which is expected to be accurate and reliable (Goelzer, 2005). This requires all company in submitting the effective internal control report with the SEC and an attested auditors opinion about the effectiveness of the report. This section has following two provisions (SEC,

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