Sarbanes Oxley Act of 2002 Essay

1294 Words Aug 6th, 2014 6 Pages
Sarbanes-Oxley Act of 2002
ACC/561

Sarbanes-Oxley Act of 2002
Following a number of discovered fraud scandals committed by well-known corporations and in order to restore public confidence in the stock market and trading of securities, the United States congress passed the Sarbanes-Oxley Act in the year 2002. As a result of the act endorsement by the New York Stock Exchange and the Securities and Exchange Commission, among many other national overseeing committees, a number of rules and regulations were proposed and adopted and that demanded new processes and programs be instilled for ensuring compliance with the requirements of the new law. The new rules and regulations pertaining to the enacted law have a common goal: 1. Pass
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Fraud via false financial reporting falls in four categories: 1. Fraudulent financial reporting – reporting false financial performance and overstating the company’s earnings and falsifying the level of liabilities to attract investor’s contributions. 2. Misappropriation of assets – where high level personnel utilize illegal schemes to benefit self by the use of cooking financial records, embezzlement, and theft of employee’s retirement accounts. 3. Avoiding paying for costs and expenses while acquiring assets and revenues fraudulently – this takes place in the form of avoiding paying taxes on all of the company’s earning’s and where the company liquidates an employee’s pension account and distributes the proceeds among the board members and upper management in the form of performance bonuses. 4. Expenditures associated with unethical and improper purposes – this type for fraud includes the use of bribery or improper payment schemes to attain financial gain or business awards that the company may not have been able to achieve using proper business practices.
Anti-fraud programs are now implemented under the Sarbanes-Oxley by all companies registered to conduct business in the United States. Such programs are closely monitored, evaluated and audited annually by the regulatory agencies to ensure and enforce compliance with the law.
Although most companies already employ some form of