The Sarbanes-Oxley Act Summary

Congress enacted the Sarbanes-Oxley (SOX) Act of 2002 to restore investor confidence by requiring public companies to strengthen corporate governance through several mechanisms, including enhanced disclosure on Internal Control Over Financial Reporting (ICFR). As claimed by regulators, the disclosures on the effectiveness of ICFR are aimed at improving the quality of financial reporting, which would, in turn, reduce the information asymmetry for investors in U.S. capital markets” (Donaldson). Sarbanes- Oxley named after its creators, Senator Paul Sarbanes, D-Md and Congressman Michael Oxley, R-Ohio. Enacted in 2002 with the purpose to crack down on corporate fraud. The implementation of Sarbanes-Oxley led to the creation of the Public Company Accounting Oversight Board (PCAOB) to oversee the accounting industry. It was created to eliminate corporate fraud, and it put in place a ban on company loans to executives while also giving job protection to whistleblowers. Before SOX was put into place the accounts were a self-regulated profession, such as medical professionals and lawyers. This is what led to the fraudulent actions of major institutions, people can be greedy, and they need checks and balances to ensure the fidelity of the firm. There are criminal enhanced penalties for corporate fraud and related misdeeds, this brings justice to the sector as well as working as a deterrent for additional immoral

The Sarbanes-Oxley Act, is an act passed by U.S. Congress on July 30, 2002. The primary reason was to protect investors from the possibility of fraudulent accounting activities by corporations. The act is commonly known as SOX Act. The act is named after its cosponsors, U.S. Senator Paul Sarbanes and U.S. Representative Michael G. Oxley. It mandates strict reforms to improve financial disclosures from corporations and prevent accounting fraud. The Sarbanes Oxley Act is arranged into eleven titles. They are Public Company Accounting Oversight Board (PCAOB), Auditor Independence, Corporate Responsibility, Enhanced Financial Disclosures, Analyst Conflicts of Interest, Commission Resources and Authority, White Collar Crime Penalty Enhancement, Corporate Tax Returns, and Corporate Fraud Accountability. These titles provide the description of specific requirements and mandates for the financial reporting. The SOX Act monitors compliance through various sections. However, the most significant sections are 302 (Disclosure controls), 401 (Disclosures in periodic reports), 404 (Assessment of internal control), 802 (Criminal penalties for influencing US Agency investigation/proper administration). As a result of SOX Act, the top management must individually certify the accuracy of financial information. The Act increased the oversight role of board of directors and the independence of the outside

Sarbanes-Oxley is not intended, or required for nonprofit companies, audit agencies, and nonprofit trustees are expecting them to be as transparent as for-profit companies that are required to comply with the Sarbanes-Oxley Act of 2002.4.McGEEHAN, P. (2003, Jun 17). Most corporate ethics officials are critical of top officers' pay. New York Times, pp. C.8-C.8. Retrieved from http://search.proquest.com/docview/432425436?accountid=32521Patrick McGeehan examines corporate ethics versus the paychecks that senior executives receive. He discuses how even “executives involved in serious violations of their companies' codes of ethics and compliance are paid severance” (McGeehan, 2003) He explains the effect that actions like this have on the rest of

The Sarbanes-Oxley Act was passed in 2002 as a response to a wave of corporate accounting scandals that damaged public trust in the controls of the US financial system. SOX therefore was created in order to create the framework for better control over accounting information and better accountability among members of senior management. Damianides (2006) notes that much of the burden of providing these tighter controls has fallen to IT departments. The Act not only sets out prescriptions for tighter internal controls, but effectively mandates that senior IT managers will need to communicate those controls to their CFO and CEO, as well as to external auditors.

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/)

Kecskés, (2016) portends that one thing to be learned from the creation of Sarbanes-Oxley Act is that haste does indeed make waste (Kecskés, 2016). Kecskés, (2016) Stated that reviewing the Sarbanes-Oxley Act from a legal-prudence view, it was a flawed piece of legislation (Kecskés, 2016. One mandate of the SOX act is that senior management must now certify the financial statement of the organization. This mandate is explained in

This guideline helps in brining substantive change in Sarbanes Oxley Act. It has been analyzed that SOX require audit work papers and other relevant information for the period of minimum seven years. These ramifications within a short period help in improving the effectiveness of Sarbanes Oxley Act. SOX are also focused towards using the internal auditors as a critical resource management. Through the internal auditors resources within the organization can be allocated easily and frauds can be controlled (Mayo, 2010). SOX have also developed security professionals in order to handle the issues related to frauds and other internal control problems. Enron is the best example of proving the effectiveness of ramification of Sarbanes Oxley Act.

SOX mandated an evaluation of the effectiveness of a company’s internal controls by both management and the company’s external auditor and formal written opinions about the effectiveness of those controls. In doing this evaluation, managers and auditors are required to examine a broad range of internal controls over financial reporting. The existence of a single material weakness requires managers and auditors to conclude that the company’s internal controls are not effective. SOX has had positive effects on both the quality of financial reporting and the quality of firm’s MCS. With SOX, the accuracy and reliability of corporate disclosures are improved. Also the federal government continues to refine SOX

After major corporate accounting scandals, especially from Enron and WorldCom, Congress enacted the Sarbanes-Oxley Act of 2002. It is a United States federal law that set corporate governance over U.S. Public Companies. The bill contains eleven sections which hold a public corporation’s board of directors’ accountable, created criminal penalties for certain misconduct, and created regulations to define how public corporations are to comply with the law. Even though it was enacted almost fifteen years ago there is still debate and controversy. Even now there is talk about Congressional Republicans aiming to loosen a provision of Sarbanes-Oxley, which was introduced in the Financial Choice Act by Jeb Hensarling (R., Texas), the chairman of the

The Sarbanes-Oxley Act of 2002 was designed to create oversight and decrease the amount of corruption in the accounting industry. The Article includes a number of provisions dealing with financial reporting, conflicts of interest, corporate ethics and the oversight of the accounting profession, as well as establishing new civil and criminal penalties.

The main policy of the Sarbanes-Oxley Act of 2002 concerns two key legislation measures on security regulation: the first section 302, commended senior management to confirm the truthfulness of the reported financial statement. The second section 404 enforced the sufficient position of the internal controls and reporting methods because maintaining internal controls is an expensive process, section 404 became a costly demonstration for public trade companies (The Sarbanes-Oxley

The article addresses affects in which the Sarbanes-Oxley Act incur on American Businesses and whether or not the Sarbanes-Oxley Act serves harm or justice to business owners. The article lists business changes, the type of company costs associated with the Act, the ways the investors chose to conduct transactions with businesses since the passing of the Sarbanes-Oxley Act, and how it affects it had on the financial markets.

Has the U.S. Corporate Sentencing Guidelines or the Sarbanes-Oxley Act promoted ethical behavior by employees, or have firms only been interested in avoiding or reducing jail time for their executives?

With this research I learned many interesting things about the Sarbanes-Oxley Act of 2002. I know how effective methods and keeping in mind the end goal to be effective in business, an organization must have the capacity to track their advantages. This following framework is normally done by an accountant and must be solid with a specific end goal to be successful. The way and organization guarantees their monetary records are solid is by setting up an arrangement of inward controls. Inside controls permit an organization to shield its advantages from extortion and burglary and additionally guaranteeing records are kept precisely by diminishing mistakes and abnormalities. Interior controls work by doling out obligation, isolating obligations

The Sarbanes-Oxley Act (SOX) was enacted in July 30, 2002, by Congress to protect shareholders and the general public from fraudulent corporate practices and accounting errors and to maintain auditor independence.   In protecting the shareholders and the general public the SOX Act is intended to improve the transparency of the financial reporting.   Financial reports are to be certified by the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) creating increased responsibility and independence with auditing by independent audit firms. In discussing the SOX Act, we will focus on how this act affects the CEOs; CFOs; outside independent audit firms; the advantages and a