Sarbanes Oxley Act : The Public Company Accounting Reform And Investor Protection Act Of 2002

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.

Senators Paul Sarbanes and Michael Oxley were the sponsors of the Sarbanes-Oxley Act of 2002, which represented a tremendous change to federal securities law. The act was signed into law by president George W. Bush who described it as “the most far reaching reforms of American business practices since the time of Franklin Delano Roosevelt1.” After the financial scandals implicating Enron, WorldCom and Global Crossing, the public needed to restore their trust in the public financial statements of the companies and that’s where the SOX Act of 2002 came into place. The act is composed of eleven titles which require numerous reforms to prevent accounting fraud, increase corporate responsibilities, among others.

The Sarbanes - Oxley Act of 2002 is the most important piece of legislation since the 1933 and 34 securities exchange act, affecting everything from corporate governance to the accounting industry and much more. This law was in direct response to the failure of corporate governance at Enron, Tyco, and WorldCom. The Sarbanes - Oxley seeks to bring back the confidence in all publicly held corporations to the shareholders, while placing more responsibility on CEOs and CFOs for the actions of the corporation. "Sarbanes - Oxley is more than just another piece of legislation - it has become synonymous with a new culture of corporate accountability and reform1." The SOX, as it has come to be known, covers a myriad amount of corporate

The Sarbanes-Oxley Act was security law that was birthed from corporate and accounting scandals. The act’s name was drafted from Senator Paul Sarbanes and Congressman Michael G. Oxley. Oxley is a congressman who introduced his Corporate and Auditing Accountability and Responsibility Act to the House of Representatives. Sarbanes was a senator who proposed his Public Company Accounting Reform and Investor Protection act to the senate in 2002. After the public kept on demanding for a reform, both of the proposed acts passed and President George W. Bush

The Sarbanes-Oxley Act was security law that birthed from corporate and accounting scandals. The act’s name derived from Senator Paul Sarbanes and Congressman Michael G. Oxley. Oxley is a congressman who introduced his Corporate and Auditing Accountability and Responsibility Act to the House of Representatives. Sarbanes was a senator who proposed his Public Company Accounting Reform and Investor Protection Act to the Senate in 2002. After the public kept on demanding for a reform, both of the proposed acts passed and President George W. Bush

The act is an exhaustive piece of legislation that contains eleven major section and some of the most important titles outline requirements on auditor independence, analyst conflict of interests, corporate responsibility, enhanced financial disclosures, internal controls assessment, and corporate fraud accountability (Bainbridge, 2007). One of the main benefits of the legislation is to establish auditor independence requirements and rules for the prevention of conflicts of interest in particular by prohibiting auditing firms from offering other services. Prior to Sarbanes–Oxley, the auditing professionals were self-regulated and the decisions that controlled the industry, such as violation of ethical standards, were made largely by auditors themselves (Verschoor, 2012). In order to prevent conflict of interests, the Sarbanes–Oxley Act grants the PCAOB authority to oversee and regulate auditing firms, conduct investigations, and impose disciplinary sanctions against accounting firms (McDonough, 2004). Another provision of the Act is requiring senior executives to be personally accountable and responsible for the financial information reports by certifying that the information is correct.(Welch, 2006). A byproduct of the law implementation is a significant quality improvement on accounting practices;

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 (SOX) was signed into law by President Bush. "The Act mandated some reforms to enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud" (SEC.Gov. 2013 P. 1). The SOX Act also created the Public Company Accounting Oversight Board (PCAOB) in response to numerous failures of the profession to fulfill its trusted role; to oversee the activities of the auditing profession (SEC.Gov, 2013. The auditing of financial statements is required for the protection of public investors; however the question that arises is whether or not all PCAOB members should be taken from the investments communities that use audited financial statements. The remaining of this

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).

On July 30, 2002, the Sarbanes – Oxley Act was developed to help protect the public from fraud within corporation. However, it was created because positive solutions were needed after the issues from fraudulent accounting practice. For example the Enron, Tyco, and WorldCom scandals and the questions concerning governance in American Corporations that occurred in

The Sarbanes-Oxley (SOX) Act of 2002 was legislated by Congress to restore reliability of financial statements with the objectives to raise standards of corporate accountability, to not only improve detection, but to also prevent fraud and abuse (Terando & Kurtenbach, 2009). Additionally, SOX was the response to general failure of business ethics such as the propagation of abusive tax shelters and greater aggressive tax avoidance strategies (Raabe, Whittenburg, Sanders, & Sawyers, 2015).

The Sarbanes-Oxley act also goes by ‘Public Company Accounting Reform and Investor Protection Act’ or also the

The Sarbanes-Oxley Act also known as SOX came into existence in July 2002 and led to key changes to the regulation of corporate governance and financial practice in addition to setting a number of non-negotiable deadlines for compliance. Its purpose is to protect shareholders and the general public from accounting errors and fraudulent practices, as well as improve the accuracy of corporate disclosures. It is named after Senator Paul Sarbanes and Representative Michael Oxley, who were its main originators. The Sarbanes-Oxley Act passed through both houses of Congress on a surge of bipartisan political support. Public shock influenced the political process. Congress was compelled to react assertively to the Enron media fallout, a struggling stock market, and impending re-elections. As a result, the Sarbanes-Oxley Act passed in the Senate

In 2002 the Sarbanes-Oxley Act was passed. This is a mandatory act that all organizations, large and small, must comply with. This legislation introduced major changes to the regulation of financial practice and corporate governance. There are eleven titles to the Sarbanes-Oxley Act. The act is named after its main architect, Representative Michael Oxley and Senator Paul Sarbanes. Former President Bush is quoted saying that it is intended to “deter and punish corporate and accounting fraud and

The Sarbanes-Oxley Act (SOX) was enacted in July 30, 2002, by Congress to protect shareholders and the general public from fraudulent corporate practices and accounting errors and to maintain auditor independence.   In protecting the shareholders and the general public the SOX Act is intended to improve the transparency of the financial reporting.   Financial reports are to be certified by the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) creating increased responsibility and independence with auditing by independent audit firms. In discussing the SOX Act, we will focus on how this act affects the CEOs; CFOs; outside independent audit firms; the advantages and a