Sarbanes Oxley Act

1322 Words Oct 15th, 2012 6 Pages
Sarbanes-Oxley Act
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
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There is much more of an emphasis on training and certification of auditors to understand and be able to design processes that are in adherence to the SOX requirements (Michelman, Waldrup, 32, 33). These changes in accounting processes are just the beginning of the much broader and much more pervasive changes at the fundamental business level within companies. The changes required by SOX also force entirely new approaches to managing, reporting, sorting, and accessing financial information, often requiring new IT systems and processes as well. The coordination of IT systems and processes, accounting and reporting, and the definition of entirely new business processes are all happening at the same time in many publicly-held companies in the U.S. through even 2009. The exponential growth of Indian outsourcing companies who have expertise in Business Process Management (BPM) have correspondingly seen an increase in their business, as many smaller American publicly-held companies do not have the people or the expertise to get their processes, systems, IT plans and accounting and reporting functions in compliance with the SOX standard in any meaningful period of time (Radtke, et.al.) As a result, many accounting professionals also must manage outsourcing contracts with companies who specialize in BPM and SOX

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