Sarbanes-Oxley Act Of 2002 Summary

The Sarbanes-Oxley Act of 2002 (SOX), also known as the Public Company Accounting Reform and Investor Protection Act and the Auditing Accountability and Responsibility Act, was signed into law on July 30, 2002, by President George W. Bush as a direct response to the corporate financial scandals of Enron, WorldCom, and Tyco International (Arens & Elders, 2006; King & Case, 2014;Rezaee & Crumbley, 2007). Fraudulent financial activities and substantial audit failures like those of Arthur Andersen and Ernst and Young had destroyed public trust and investor confidence in the accounting profession. The debilitating consequences of these perpetrators and their crimes summoned a massive effort by the government and the accounting profession to fight all forms of corruption through regulatory, legal, auditing, and accounting changes.

The Sarbanes-Oxley is a U.S. federal law that has generated much controversy, and involved the response to the financial scandals of some large corporations such as Enron, Tyco International, WorldCom and Peregrine Systems. These scandals brought down the public confidence in auditing and accounting firms. The law is named after Senator Paul Sarbanes Democratic Party and GOP Congressman Michael G. Oxley. It was passed by large majorities in both Congress and the Senate and covers and sets new performance standards for boards of directors and managers of companies and accounting mechanisms of all publicly traded companies in America. It also introduces criminal liability for the board of directors and a requirement by

This memorandum discusses a brief history of Pat, his wrongdoings and related action, and the response by the related law enforcement agencies.

The United States has one of the biggest and fastest growing economies of the world. Our financial system has been affected by numerous crises throughout the years and as a result Congress has reacted in the most recent times and two well-known acts have been signed into laws by the presidents at the time to protect investors and consumers alike. A brief overview of the Sarbanes-Oxley Act of 2002, a discussion of some of the provisions therein, opinions of others regarding the act and also my personal and professional opinion will be discussed below. The same will be examined about the Dodd-Frank Wall Street Reform and Consumer Protection Act.

In this paper, I will be discussing the Sarbanes-Oxley Act of 2002. I will divide the paper up into four sections: the history of the act, trace its implementation, discuss its impact on society, and analyze the efficiency of the act. The act itself is made of of 11 sections or “titles”. Each title is a major key point in the act which also goes into more depth by containing several sections within it. This paper will me going over all of the sections covered in the act, but will focus on the major sections that have proven this act to be efficient in its purpose and the negatives as well. This act has been quite controversial regarding its strengths and weaknesses, but it contains some key values that should be used as a

In reaction to a number of corporate and accounting scandals which included Enron Congress passed The Sarbanes-Oxley Act of 2002 (SOX) (Sarbox) also known as the "Public Company Accounting Reform and Investor Protection Act” and the "Corporate and Auditing Accountability and Responsibility Act" was enacted July 30, 2002. The Sarbane-Oxley Act is a US federal law that created new and expanded laws regarding the requirements for all US public company boards, management, and accounting firms. The act has a number of provisions that apply to privately owned companies. The Act addresses the responsibilities of a public corporation’s Board of Directors, adds criminal penalties for misconduct, and requires the SEC to create regulations that define how public corporations are expected to comply with the law. The SOX increases the penalties a company pays for fraudulent financial activity, and requires top management to provide individual verification to certify the accuracy of financial information, while also increasing the oversight role of a company’s Board of Directors and the independence of outside auditors.

Numerous scandals broke out in the early 2000s, losing the trust of investors in the public

Corporations around the world have exhibited ethical business practices. However, some corporations gave into unethical business practices such as fraud, dishonesty, and scams. One particular dishonest act that remained common amongst companies such as Enron, WorldCom, and Tyco was the fabrication of financial statements. These companies were reporting false information on their financial statements so that it would appear that the companies were making profits. However, those companies were actually losing money instead. Because of these companies’ actions, the call to have American businesses to be regulated under new rules served as a very important need. In 2002, Paul Sarbanes from the Senate and Michael G. Oxley from the House of Representatives created what is now known as the Sarbanes-Oxley Act of 2002.

The Sarbanes-Oxley Act is a federal law that was enacted in 2002. Enron and other similar corporate scandals led to the passing of this act. The Sarbanes-Oxley Act (SOX) is also known

On July 30, 2002, the Sarbanes-Oxley Act of 2002 was signed into law by the acting President George W. Bush. The overall purpose of the Act was “to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes.” (SEC, 2013) This Act mandated multiple amendments to improve corporate responsibility, enhance financial disclosures, and combat corporate and accounting fraudulent practices. One requirement of the Act involves a management’s report on internal controls over financial reporting to be included in the annual financial reports of a company. On July 30, 2014, the Securities and Exchange Commission (SEC) announced that CEO Marc Sherman and former CFO Edward L. Cummings of a computer equipment company named QSGI, Inc. are being charged with misrepresenting the state of its internal controls over financial reporting to external auditors and the investing public. Inadequate internal control within the company can be extremely detrimental because investors and lenders rely heavily on financial reports to make decisions. The incorrect records of QSGI enabled the company to maximize loans from their top creditor. This report will show how QSGI’s lack of internal controls hindered their ability to generate revenue and maintain one of the company’s operation centers.

The Sarbanes-Oxley Act of 2002 was the result of a number of large financial scandals in the United States in the late 1990s and early 2000s. One of the most well-known corporate accounting scandals was the Enron scandal, which was exposed in 2001. Enron, an energy company that was considered one of the most financially sound corporations in the United States before the scandal, produced false earnings reports to shareholders and kept large debts off the accounting books (Peavler, 2016). Enron executives also committed fraud by embezzling corporate funds and manipulating the stock market. Enron shareholders lost around $74 billion dollars, Enron employees lost their retirement accounts, and some Enron employees even lost their jobs (The 10 Worst Corporate Accounting Scandals of All Time, n.d.).

In his testimony concerning the implementation of the Sarbanes-Oxley Act of 2002, Chairman of the U.S. Securities and Exchange Commission William H. Donaldson says that the first year of the Sarbanes-Oxley Act has produced an impressive record of accomplishments in an incredibly short period of time. The Act set ambitious deadlines for more than 15 separate rulemaking projects by the Commission to implement many of the Act's provisions. The Commission provided a number of opportunities for public input on its proposals, and thousands of letters of public comment in crafting final rules were carefully

Sarbanes-Oxley is not intended, or required for nonprofit companies, audit agencies, and nonprofit trustees are expecting them to be as transparent as for-profit companies that are required to comply with the Sarbanes-Oxley Act of 2002.4.McGEEHAN, P. (2003, Jun 17). Most corporate ethics officials are critical of top officers' pay. New York Times, pp. C.8-C.8. Retrieved from http://search.proquest.com/docview/432425436?accountid=32521Patrick McGeehan examines corporate ethics versus the paychecks that senior executives receive. He discuses how even “executives involved in serious violations of their companies' codes of ethics and compliance are paid severance” (McGeehan, 2003) He explains the effect that actions like this have on the rest of

The Sarbanes-Oxley Act of 2002 was created in reaction to the increasing number of accounting fraud scandals in the late nineties and early 2000 's. One example of an accounting scandal that occurred was Enron. Andrew Fastow, the CFO at the time, created phony partnerships and companies, keeping separate books for these companies. He convinced some of the major banks to invest in these companies. The Vice-President at the time, Sharon Watkins, discovered these fraudulent accounting treatments, effectively becoming a whistleblower. The fraud at Enron also caused the end of the accounting firm Arthur Anderson, which was the firm that audited the financial statements of Enron. Sarbanes-Oxley no longer allows top executives to place blame on other employees, as they are now required to sign-off on all financial statements, meaning the executives agree with all accounting treatments.

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.