The Effect Of Sarbanes Oxley On Accounting Essay

1253 WordsOct 24, 20166 Pages
Abstract The Effects of Sarbanes Oxley on Accounting Introduction The law of Sarbanes Oxley has changed the business history since twenty ears ago. When is came out, there is a new regulation for the company and get huge effects to the business. Before 2002, the U.S markets have suffered many financial scandals. Frauds of these enterprises not only cheated customers, but also took a heavy toll themselves. These behaviors seriously damaged the capital market order and negatively affected American’s economy at that time. Therefore, “to protect investors by improving the accuracy and reliability of corporate”, and “to restore public confidence in financial statement”, Sarbanes-Oxley Act was passed in 2002 for all U.S. public company boards, management and public accounting firms. After Sarbanes Oxley law came out, the effects on the whole business market has changed a lot. Also, the law took a big challenge on the governance, tax, implementation and accounting profession. Problem before Sarbanes Oxley The financial report during the late 1990s and early 2000s had less public confidence in the auditor’s performance. The first issues are on the rise of non- audit, consulting and service. At that time, clients were paying their auditors more for consulting not for the financial statement audit. For the result, the company seek for the lower-margin audit as a foot-in-the-door to more lucrative consulting engagements. The later issue is about the downward

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