The Sarbanes Oxley Act ( Act ) Essay

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

Sarbanes-Oxley was motived by the never-ending waves of corporate financial scandals by Enron, Arthur Andersen, WorldCom, Waste Management, Global Crossing etc. There are 11 sections in the act. There following are the three (3) most important provision in the Sarbanes Oxley Act due to the simple fact that The US Congress were trying to enact a law to combat corporate fraud and misleading of investors:

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:

Between the years 2000 and 2002 there were over a dozen corporate scandals involving unethical corporate governance practices. The allegations ranged from faulty revenue reporting and falsifying financial records, to the shredding and destruction of financial documents (Patsuris, 2002). Most notably, are the cases involving Enron and Arthur Andersen. The allegations of the Enron scandal went public in October 2001. They included, hiding debt and boosting profits to the tune of more than one billion dollars. They were also accused of bribing foreign governments to win contacts and manipulating both the California and Texas power markets (Patsuris, 2002). Following these allegations, Arthur Andersen was investigated for, allegedly,

The Sarbanes-Oxley can into play when the SEC conducted an investigation to determine if fraud exists in major corporations. The SEC request CEO’s and CFO's of the publicly-traded corporations file a sworn statement ensuring that the organization used integrity when it came to their financial statements and other documentation they file with the SEC that year. There

The United States has one of the biggest and fastest growing economies of the world. Our financial system has been affected by numerous crises throughout the years and as a result Congress has reacted in the most recent times and two well-known acts have been signed into laws by the presidents at the time to protect investors and consumers alike. A brief overview of the Sarbanes-Oxley Act of 2002, a discussion of some of the provisions therein, opinions of others regarding the act and also my personal and professional opinion will be discussed below. The same will be examined about the Dodd-Frank Wall Street Reform and Consumer Protection Act.

In the early 2000’s there were a series of financial scandals that took place by large companies such as Enron, Tyco, and WorldCom. The impact of these scandals was significant. Investors lost large amounts of money. Employees of the scandalous companies not only lost their jobs but lost their life savings. The financial scandals that had taken place were so severe that an Act was created in response to them in hopes to prevent these scandals from happening. The Sarbanes-Oxley Act, also referred to as SOX or Sarbanes-Oxley, was created by Senator Paul Sarbanes and Representative Michael Oxley and was signed into law by President George W. Bush on July 30, 2002. The creation and passing of the act was so tremendous that “in the opinion of most observers of securities legislation” Sarbanes-Oxley was “viewed as the most important new law enacted since the passage of the Securities and Exchange Act of 1934” (Ink.com 2008).

The Sarbanes-Oxley Act of 2002 (SOX) was passed by U.S congress in 2002 to protect investors from fraudulent accounting activities by corporations. Whether the organization is big or small, the act mandates strict reforms to improve financial disclosures from corporations, helping to prevent accounting fraud. It is a federal law that established new and expanded requirements for all U.S. public company boards, management, public accounting firm's, as well as privately held companies. SOX requires top management individually certify the accuracy of financial information, and includes penalties for fraudulent financial activity. The bill was enacted in response to a large number of major corporate and accounting scandals the cost of investors

The purpose of the Sarbanes-Oxley Act is to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities law, and for other purposes. (Lander, 2004) The Act created new standards for public companies and accounting firms to abide by. After multiple business failures due to fraudulent activities and embezzlement at companies such as Enron Sarbanes and Oxley recognized a need for the revamping of our financial systems laws, rules and regulations. Thus, the Sarbanes-Oxley Act was born.

The Sarbanes-Oxley Act was passes in 2002 in response to a handful of large corporate scandals that occurred between the years 2000 to 2002, resulting in the losses of billions of dollars by investors. Enron, Worldcom and Tyco are probably the most well known companies that were involved in these scandals, but there were a number of other companies guilty of such things as well. The Sarbanes-Oxley Act was passed as a way to crackdown on corporations by setting new and improved standards that all United States’ public companies and accounting firms were and are required to abide by. It also works to hold top level executives accountable for the company, and if fraudulent behaviors are discovered then the executives could find themselves in hot water. The punishments for such fraudulence could be as serious as 20 years jail time. (Sarbanes-Oxley Act, 2014). The primary motivation for the act was to prevent future scandals from happening, or at least, make it much more difficult for them to happen. The act was also passed largely to protect the people—the shareholders—from corporations, their executives, and their boards of directors. Critics tend to argue that the act is to complicated, and costs to much to abide by, leading to the United States losing its “competitive edge” in the global marketplace (Sarbanes-Oxley Act, 2014). The Sarbanes-Oxley act, like most things, has its pros and cons. It is costly; studies have shown that this act has cost companies millions of

The Sarbanes-Oxley Act, or SOX Act, was enacted on July 30, 2002. Since it was enacted that summer it has changed how the public business handle their accounting and auditing. The federal law was made coming off of a number of large corporations involved in scandals. For example a company like Enron was caught in accounting fraud in late 2001 when the company was using false financial statements. Once Enron was caught that had many lawsuits filed against them and had to file for bankruptcy. It was this scandal that played a big part in producing the Sarbanes-Oxley act in 2002.

The Sarbanes Oxley Act came to existence after numerous scandals on financial misappropriation and inaccurate accounting records. The nature of scandals made it clear there are possible measure that could be used to prevent future occurrence of financial scandals. And the existence and effectiveness of Sarbanes Oxley has caused

After major corporate and accounting scandals like those that affected Tyco, Worldcom and Enron the Federal government passed a law known as the Sarbanes-Oxley Act of 2002 also known as the Public Company Accounting Reform and Investor Protection Act. This law was passed in hopes of thwarting illegal and misleading acts by financial reporters and putting a stop to the decline of public trust in accounting and reporting practices. Two important topics covered in Sarbanes-Oxley are auditor independence and the reporting and assessment of internal controls under section 404.

The Sarbanes-Oxley Act of 2002 is one of the most important legislations passed in the 21st century effecting financial practice and corporate governance. This act was passed on July 30, 2002 thanks to Representative Michael Oxley a republican from Ohio and Senator Paul Sarbanes a democrat from Maryland. They both passed two different bills that pertain to the same problem which had to do with corporation's auditing accountability and financial fraud problems within corporations. One was bill (S. 2673) brought by Senator Sarbanes and the other bill (H. R. 3763) brought by Representative Oxley. Both bills where passed separately one by the house and the other by the

The Sarbanes-Oxley Act, enacted as a reaction to the WorldCom, Enron, and other corporate scandals, improved the regulatory protections presented to U.S. investors by adding an audit committee requirement, intensification of auditor independence, increasing disclosure requirements, prohibiting loans to executives, adding a certification requirement, and strengthening criminal and civil penalties for violations of securities laws.