The Sarbanes Oxley Act ( Sox ) Essay

Financial reporting practices and ethics have manifested an ocean of literature. This has mainly come from organization theorists that address accounting practices. These theorists and professionals have given fresh accountability measures. Their ideals give this industry the tools needed to survive, grow and prosper. The way an organization prepares and reports its financial information and handles its daily operations is in essence financial practices, and in the way it accomplishes this reveals their ethical standards to which they adhere to. This paper will discuss the financial practices, ethical standards, and

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 Public Company Accounting Reform and Investor Protection Act" was signed into law by President Bush on July 30, 2002. The law is now known as The Sarbane-Oxley Act (SOA). The SOA has eleven titles within the act and numerous sections, pertaining to ethics, accounting, financial reporting, responsibilities of officers, whistleblower protection, and increased criminal penalties built upon prior securities laws. SOA is the most comprehensive securities legislation written since the 1940s. In the early part of the twentieth century companies did not have the sophistication and abilities of the modern company in regard to information technology, number of accountants, advisors and analysts. This legislation is a big step

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.

Ethics are crucial to the accounting profession and the business world, so choosing an ethics system to base your moral decisions on is extremely important. Accountants and all business professionals will be confronted with moral dilemmas on a daily basis. Being strong in your faith and knowing what you believe in will help you to always make the right decision. Based on this reasoning, this essay will explain why deontology is the best ethics system for the accounting profession.

Sarbanes- Oxley Act (SOX) was created following the discovery of unethical and fraudulent activates of companies likes Enron were made public and lead to a major crisis (Fraser & Simkins, 2010). The SOX Act is a code of conduct that public organizations must abide by an was form to ensure that corporations not only make ethically decisions for legal decisions and practices as well. Public organization must abide by the state and federal laws that SOX consists of and their attorneys must report any violations. Organization must create code of conduct policies and ensure employees abide by the policy. Whistleblowers are protected under the SOX Act and any employees that were terminated under unethically and illegally can be reinstated and paid

Sarbanes-Oxley is one compliance law that has significant differences in private and publicly held companies. Even though a best practice among both company types is to be SOX complaint it is not necessarily required in the privately held company’s case. There are a few that apply to both though a list of these include:

“Laws and regulations are established by governments to set minimum standards for responsible behavior — society’s codification of what is right and wrong” and to satisfy stakeholder’s concerns regarding companies’ abilities to act in an ethical fashion at all times (Ferrell, Fraedrich, & Ferrell, 2013, p. 95). The Sarbanes-Oxley Act (SOX) was created following accounting fraud scandals of several companies, including the Enron Corporation and Worldcom (Ferrell et al, 2015). The Act was established to protect stakeholders and the public from accounting fraud. It has done a fair job of deterring fraudulent reporting (Langevoort, 2007); however, I do not think regulating legislation of any kind can completely prevent future ethical misconduct.

Accountants are held to a higher ethical standards and they must performed their duties in compliance with standards or ethical values of honesty, integrity, objectivity, due care, confidentiality, which must be fully committed to. They must put clients or public interest first before their own. They must have and ethical values and maintain those values way beyond what the society or the company’s code of ethic. It is important that accountants’ behavior or ethical values is in conformity with the

Ethical issues have greatly transformed in our lives since the great Enron, Xerox and other huge corporations proposed big profits showing earnings of billions of dollars and yet in reality facing bankruptcy. These corporations faced great trouble with the federals and state for manipulating financial statements. But not only corporations can be blamed on this, accounting firms were involved in this as much as the corporations were. With the business stand point, ethics comprises of principles and standards that guide behavior. Investors, traders, customers, and legal system determine whether a specific action is ethical or unethical. Ethical issue is a vast subject, but we will look at the niche

As long as the largest quantity of people is receiving the greatest benefit as a result of a particular action, that action can be rationalized. With a greater understanding of the two major ethical systems proposed for the accounting profession, the evaluation of those systems becomes simpler.

Document destruction - destroying documents in a federal or bankruptcy investigation is considered a felony and can carry penalties of up to 20 years in prison.

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

Ethics in any industry is important, but for Accounting professionals and those in need of their services, it is a particularly stressed element. Information provided by accountants is used to make major decisions, including investing, downsizing, expanding, etc, so accountants are expected to be competent, reliable, and have a high degree of professional integrity. Because of these high expectations, the professional accountancy industry, like many other professions, has adopted professional codes of ethics (Woelfel, 1986). These ethical codes go above and beyond the requirements for state or federal laws and regulations. There are several professional organizations within the

The study is important because it examines the role of ethics in accounting. The research on identified problems is necessary due to vagueness of ethics concepts and its difficulty to