The Sarbanes Oxley Act ( Sox )

The Sarbanes - Oxley Act of 2002 is the most important piece of legislation since the 1933 and 34 securities exchange act, affecting everything from corporate governance to the accounting industry and much more. This law was in direct response to the failure of corporate governance at Enron, Tyco, and WorldCom. The Sarbanes - Oxley seeks to bring back the confidence in all publicly held corporations to the shareholders, while placing more responsibility on CEOs and CFOs for the actions of the corporation. "Sarbanes - Oxley is more than just another piece of legislation - it has become synonymous with a new culture of corporate accountability and reform1." The SOX, as it has come to be known, covers a myriad amount of corporate

Congress established the Sarbanes-Oxley Act of 2002, which is otherwise called the Public Company Accounting Reform and Investor Protection Act, in the beginning of corporate and accounting scandals that prompted liquidations, serious stock misfortunes, and a loss of trust in stocks (Batten, 2010). The demonstration forces new obligations on corporate administration and criminal authorizes on those supervisors who spurn the law, and it

Sarbanes-Oxley Act (SOX) requires the financial reporting to be accurate within a business. This act does not currently affect the public health systems but the current system is beginning a flux towards applying this to non-profits. In an attempt to plan for the future it would be in the hospitals best interest to become SOX compliant. This will allow the hospital to be compliant when these changes finally do affect non-profit and public healthcare institutions. Sox is regulated and audited by Public Company Accounting Oversight Board (PCAOB). This organization was created specifically for SOX compliance and currently has no other mission.

The Sarbanes-Oxley Act (SOX) was put into legislation on July 30, 2002 by President George W. Bush, for the purpose of regulating the financial practices and a host of other corporate and securities issues for all publically traded organizations. “Essentially, it was an attempt to impose tighter controls on the financial reporting, to try and provide more transparency in financial reporting, and to hold people accountable in the financial reporting.” (Dewey, 2012). It’s important to note that the SOX law applies to all companies registered under Section 12 of the Securities and Exchange Act of 1934. Privately held and non-for profit companies are not impacted by the SOX law, however many have elected to voluntarily comply with the legislation. The law was enacted due to several corporate scandals in early 2000-2002; Enron, WorldCom and Tyco to name just a few. The early 2000’s will always be remembered for the deep recession and decline in economic activity, not just in the US, but in the global marketplace as well.

“Sarbanes-Oxley Act of 2002” mandated a number of reforms to enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud, and created the "Public Company Accounting Oversight Board," also known as the PCAOB, to oversee the activities of the auditing profession” (U.S. Securities and Exchange Comissions).

Cost: The cost to PacSun of SOX compliance was significant. In FY 2004 the total cost of compliance-financial statement audit and 404 compliance- was an estimated $2 million, in year two, the costs declined by almost 40%. There are also implicit costs, for example, SOX had made it more burdensome to serve on the Audit Committee. The meetings with the Committee were frequent and time-consuming. Also added to the costs are training programs for SOX. Lots of unneeded documentation were created.

US government in July 2002 passed the Sarbanes Oxley Act of 2002 shortly known as SOX. The act was named on Senator Paul Sarbanes and Representative Michael Oxley who was its main contributor. The act came after when a series of scandal such as Enron, WorldCom, Tyco, Global Crossing and Arthur Andersen came into the light, which resulted in the loss of investors’ money and confidence. Therefore, the main objective of SOX was to protect the interest of shareholders and general public from accounting errors and fraudulent practices done by corporations.

The Sarbanes-Oxley Act. An act passed by U.S. Congress in 2002 to protect investors and the general public from the possibility of accounting errors and fraudulent practices by corporations. The Sarbanes-Oxley Act (SOX), named after U.S. Senator Paul Sarbanes and U.S. Representative Michael G. Oxley, which contains eleven sections, mandated strict reforms to improve financial disclosures and prevent accounting fraud. The eleven sections of the bill cover responsibilities of a public corporation’s board of directors, adds criminal penalties for certain misconduct, and also requires the Securities and Exchange Commission (SEC) to create regulations to define how public corporations are to comply with the law. SOX other main purpose is also

Financial reporting has been dissected over and over again by legislation. The U.S. Securities and Exchange Commission (SEC) hold the key to providing protection and integrity when companies are submitting their financial statements. Although their mission is to provide order and efficiency for financial markets, insidious plans are still developed by companies which ultimately result in turmoil to the economy. To provide a safeguard to investors, the Sarbanes-Oxley Act (SOX) was passed by congress in 2002, which was constructed because of fraudulent acts of well-known companies such as Enron. Before the SOX was inaugurated, two sets of accounting rules were used as guides for CPA firms.

Though a plus for auditors, this required the development of two different sets of auditing standards, one for the public accounting sector and one for the private sector. In a 2010 study of SOX, the Institute of Management Accountants Foundation for Applied Research, (IMA), confirmed the following benefits when complying with SOX legislation: 1.) Companies that are SOX compliant have realized and achieved strategic goals, 2.) SOX compliance has led to effective and efficient analysis of performance, 3.) Companies have achieved comprehensive improvements in performance by standardizing and upgrading processes, 4.) Duplicative processes have been identified and eliminated, increasing efficiency and effectiveness, 5.) Transparency of reported information has increased, 6.) Financial reporting has improved as a result of stronger, effective and efficient internal controls over financial reporting, 7.) Increased improvement in the efficiency of both internal and external audits, thereby decreasing audit costs, and 8.) Automating manual controls increasing time efficiency” (Basile, Handy, & Fret,

The objective of the act is to protect the general public and shareholders from fraudulent activities and accounting errors and to improve the veracity of corporate disclosure. All public companies must now comply with the Sarbanes-Oxley Act. This act not only affects a company financially but it also affects the IT department as they will be managing the data and how long it is to be stored for. The SOX act has stated that all records within the business should not be stored for more than five years. If this is not complied with then there is a chance that they may be faced with fines, imprisonment or even both. The benefactors of the SOX act believed that it was fundamental to “restore public faith in published financial statements by assuring that accounting records were accurate and could be relied upon” (Jahman & Dowling, The Impact of Sarbanes-Oxley Act, 2008). There has been a growing impression that these previous scandals could have been prevented if an agency was formed by the government to help monitor and prevent these inconsistencies in accounting. The debate still continues on whether the Act is efficient.

Sarbanes-Oxley Act (SOX) is the legislation formed by the U.S. Congress when the industry was witnessing scandals like WorldCom, Enron and Tyco. SOX will require two important units to team up. One being the team that includes IT architects and security with practical expertise in Identity and Access Management (IAM) processes. The other unit would include finance, legal, audit and compliance experts who are in charge of planning, defining, testing and executing SOX compliances. Section 409 comprises material event reporting and 'real-time' insinuation. This infers enhanced notification of material events to the marketplace that may impact the financial result of business. This will call for businesses to bring higher attention on the identification,

The Sarban Oxley act 2002 has affected the internal controls into a privileged degree of protection against fraudulent accounting activities in corporations. The Sarban Oxley act mandated a rigorous discipline for financial disclosures of corporations and a zero tolerance for fraudulent practices. sox was created in regard to the accounting scandals in the early

A company’s task is to ensure that their accounting operation are in compliance with the Sarbanes Oxley Act. Some of the most important components of SOX to public corporations are SOX section 302 – Corporate

In 1992, the Committee of Sponsoring Organizations (COSO) of the National Commission on fraudulent monetary reporting (Treadway Commission) provided a typical definition of control and also the ‘Internal Audit - Integrated Framework” (COSO Model) to help organizations in achieving monetary, compliance, and operational goals and objectives. conjointly known within the report were five reticular areas of control (Control setting, Risk Assessment, management Activities, Monitoring, and data and Communication). The model as bestowed on the subsequent page, in conjunction with recommendations contained within the 1992 report, has several overlaps with SOX laws.