The Sarbanes-Oxley Act

561 Words Feb 5th, 2018 2 Pages
Passed in 2002 amid a wave of accounting scandals, Sarbanes Oxley (SOX) was intended to strengthen the accounting, auditing and reporting of public companies and boost investor confidence in the US financial system.

The authors note that in general Sarbanes-Oxley has succeeded in its mandate. There have not been, for example, any of the corporate accounting scandals of the Enron or Worldcom type that occurred before the law came into effect. There have been scandals in business, and failures, but none fell under the auspices of Sarbanes-Oxley. The failures of AIG and Lehman Brothers did not occur because of accounting scandals but rather because of business failures of other types. The Bernie Madoff scandal has also been cited by some SOX opponents, but that did not occur with a public company and was therefore not under the auspices of SOX either.

There have been repeated criticisms from business about the onerous nature of the legislation. It costs a lot of money to implement, for example, which restricts access to capital for smaller companies, who might choose to forgo equity markets for longer in order to avoid the provisions of Sarbanes-Oxley. There remain members of Congress who are opposed to the Act and there is "fierce opposition" to the strengthening of the Public Companies Accounting Oversight Board…

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