The Sarbanes Oxley Act ( Sox )

Professional standards do not allow for a company’s auditors to also provide tax services and still retain their independence. The SEC and the PCAOB have put restrictions on the nonaudit services that a company’s auditors can provide. These restrictions really limit the company’s auditors to the extent that if a firm provides auditing services for a company they cannot really provide any other types of services. This limitation was put into place in order to maintain the independence of auditors and the companies that they audit. If an accounting firm was allowed to provide auditing services as well as tax services to a company, the independence, in such a case, of the firm would not be maintained because the firm would be in part auditing

The Sarbanes-Oxley (SOX) Act was passed by Congress in 2002 to address issues in auditing, corporate governance and capital markets that Congress believed existed. These deficiencies let to several cases of accounting irregularities and securities fraud. According to the Student Guide to the Sarbanes-Oxley Act many changes were made to securities law. A new federal agency was created, the entire accounting industry was restructured, Wall Street practices were reformed, corporate governance procedures were changed and stiffer penalties were given for insider trading and obstruction of justice (Prentice & Bredeson, 2010). Tenet Healthcare Corporation, one of the largest publicly traded healthcare companies in the US at the time, was accused

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

Based on the video "Bigger Than Enron," discuss at least five features of the Sarbanes-Oxley Act (SOX) that are the result of events related to corporate fraud.

New levels of auditor independence and personal accountability for CEOs and CFOs are provided by the Act. Additional accountability for corporate Boards, as well as increased criminal and civil penalties for securities violations, increased disclosure regarding executive compensation, insider trading and financial statements are also presented under SOX. (The Institute of Internal Auditors: “The Sarbanes-Oxley Act of 2002: Effect on Audit Committees at Organization Not Publicly Traded.” January 2004. Accessed May 31, 2012 from: http://www.itaudit.org/)

The Sarbanes-Oxley Act was signed into law on July 30, 2002, by President George W. Bush; it was a congressional regulatory response to the enormously damaging corporate scandals at WorldCom, the Arthur Anderson accounting group and most notoriously, Enron. Because of the damage done not only to the reputations of those corporations and to the American corporate community but also to the stockholders and people who lost life savings (people who lost 401-K investments in the scandal), Congress had to take action to try and avoid scandals like these in the future. Hence, the Sarbanes-Oxley Act was created and passed into law. Will it deter future criminal activity vis-à-vis corporate financial reporting? There is no guarantee that the Act will prevent future corruption, but this paper asserts that the Sarbanes-Oxley Act is a step in the right direction.

The SOX Act crafted new standards for corporate accountability. The act also created new penalties for wrongdoing and fraudulent practices. These penalties included fines and time in federal prison. This law changed the way corporate boards and executives interact with each other and with corporate auditors. It removed the all-to-common defense of "I wasn't aware of financial issues" from CEOs and CFOs, holding them accountable for the accuracy of the company’s financial statements. In addition to the executives, the auditors who did the reports were also liable for the contents of the reports, and could be fined and jailed as well. This did away with another all-to-common defense of “I wasn’t aware of false reporting by the company.” The Act specifies new financial reporting responsibilities, including adherence to new internal controls and procedures designed to ensure the validity of their financial records. That is to say, checks and balances were put in to place so that a company’s accounting firm that produced financial statements could not also be an independent auditing firm for the same company. While this makes common sense, it was not a law, and a few

I think that the Sarbanes Oxley Act of 2002 (SOX) has been feasible in managing tricky financial reporting from major corporations. It has a much lower influence on the misappropriation of benefits. No law or Act have the ability to cover all human predisposition to endeavor relationships with good offense. The law made it harder to quote out of context the association's cash related affairs and made the results more extraordinary (Ferrell, Fraedrich, & Ferrell, 2013). SOX have increased auditor’s vigilance and tightened management's responsibility for reporting misappropriating assets (Church & Shefchik, 2012). Here are two reasons I trust SOX was successful. First, this Act was powerful enough to cause chief executives to consider money

Should CEOs and CFOs be held accountable for fraudulent accounting practices? Should investors have complete and accurate information regarding potential investments? Following the Enron scandal in 2001, when Enron filed for bankruptcy after it was discovered that the company employed improper accounting practices, the alarm rang on Capitol Hill and the Sarbanes-Oxley Act (SOX) of 2002 was penned. SOX is one of the most significant regulatory reform’s since the Great Depression (McAdams et al, 2009, p.390).

After further review, the article examines how there is currently an expanded cost to organizations to pay for cutting edge yearly audits, which inadvertently increases the costs to every customer. The consumer or client may view this as being unfair. The article verifies that the demonstration was intended to urge financial

The following was an Act passed by U.S. Congress in 2002 in response to a loss of confidence among American investors suggestive of the Great Depression; President George W. Bush signed the Sarbanes-Oxley Act into law on July 30, 2002. SOX as the law was quickly entitled, was planned to guarantee the reliability of publicly reported financial information and reinforce confidence in U.S. capital markets. SOX contains expansive duties and penalties for corporate boards, executives, directors, auditors, attorneys, and securities analysts. SOX works to protect investors from the possibility of fraudulent accounting activities by corporations. The Act mandated a number of reforms to improve corporate responsibility, improve financial disclosures

The Sarbanes Oxley Act of 2002 enacted many new legislations including the creation of the Public Company Accounting Oversight Board, which inspects audits of public companies, increased regulations on auditor independence, prohibiting certain non-audit activities, increased corporate responsibility of company executives and management for financial reports, timely and accurate disclosure requirements, and management’s responsibility to design and test the effectiveness of internal controls. These legislations are just a few of the key sections of the Sarbanes Oxley Act among many others and have has a great impact on public auditors and the audit process of public companies. Although many of these new requirements and regulations require more detail, time, and money to implement, they help to protect the public interest of investors and restore the public’s trust in auditors and the financial reports of corporations and business that must follow the policies the forth in the Sarbanes Oxley Act.

The services provided by auditors can have a far-reaching influence. For many years, investors have relied on audited financial statements to make sound investment decisions. Thus, auditors are obliged to protect the interests of investors, taking on the role of gatekeepers (Kane, 2004). In recent years, countries around the world have witnessed examples of corporate fraud. The Sarbanes-Oxley Act, passed by the US Congress in the wake of such scandals, is considered the most influential act with the greatest impact on auditing professionals. This is an example of a government’s attempt to halt corporate fraud by improving corporate governance and strengthening the function of auditing, as a means to restore trust. However, quality and integrity

The Sarbanes-Oxley Act of 2002 (SOX) was enacted into law in 2002 in the wake of corporation financial reporting scandals involving large publicly held companies. SOX instituted new strict financial regulations with the intent of improving accounting practices and protecting investors from corporate misconduct. SOX requires corporate executives to vouch for the accuracy of financial statements, and to institute and monitor effective internal controls over financial reporting. The cost of implementing an effective internal control structure are onerous, and SOX inflicts opportunity costs upon an enterprise as executives have

Through the study carried out by Ge and McVay, the relationship between firm size and material weaknesses is revealed. For purposes of this study, the term ‘large audit firm’ refers to the Big 6 accounting firms of: BDO Seidman, Deloitte & Touche, Ernst & Young, Grant Thornton, KPMG, and PricewaterhouseCoopers. Ge and McVay reasoned that larger audit firms are expected to have more expertise and higher exposure to legal liability than smaller firms (Ge et al., 151). The research findings validated this hypothesis, proving large accounting firms to be positively correlated with internal control deficiencies. This asserts to the fact that larger firms have a greater depth of resources and are subjected to greater oversight, as exemplified by the PCAOB’s annual reviews (Ge et al., 153).