The Importance Of The Sarbanes-Oxley Act

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he Securities and Exchange Commission was the two major Securities Act created by Congress in the 1930's to help the public and investors reconstruct their trust toward the securities market as the Stock Market Crash in 1929 had an effect on the public of the United Stated at the time(The Investor's Advocate,2013). The U.S. Securities and Exchange Commission is a federal agency, utilize the force of actions to enact federal securities laws, control regulation by rules, principles and adjust to standard requirements; the main purpose is to make sure the operation is accurate. In an effort to secure confidences and the reputation of the accounting professions, the Congress established the PCAOB which is supervised by the SEC to support the accuracy …show more content…

The Sarbanes-Oxley Act of 2002 was an act created by the PCAOB, passed by U.S. Congress in 2002 to prevent distortion or misleading accounting activities conducted by the corporation. The accounting profession was exercising ruling within the profession prior to the enactment of the law, the law enabled external and independent oversight (The Sarbanes-Oxley Act). The main policy of the Sarbanes-Oxley Act of 2002 concerns two key legislation measures on security regulation: the first section 302, commended senior management to confirm the truthfulness of the reported financial statement. The second section 404 enforced the sufficient position of the internal controls and reporting methods because maintaining internal controls is an expensive process, section 404 became a costly demonstration for public trade companies (The Sarbanes-Oxley …show more content…

Firms are not allowed to run hedge funds for their own profit. In the events that financial companies created overwhelming fear by conducting riskiest financial activities, the government has the right to end bailouts by closing the financial institutions that are not meeting goals (Wall Street Reform). The act focuses on restructuring the U.S. regulatory system in an area such as consumer protection, trading restrictions, credit rating, regulation of financial products, corporate governance, disclosure and transparency(The Investor's advocate, 2013). Every federal financial agency is required to comply to regulation by utilizing an assessment to monitor credit-worthiness of the money market security in reference to credit rating review. The SEC office of credit rating ensures agencies conforms to reality with truth to prevent credit rating agencies from providing the misleading rating in favorable to investors which affect judgment (Credit Rating Agencies). The SEC is responsible for ensuring financial agency follow through with the truthfulness of the credit rating as this would affect and direct investor's

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