The Sarbanes Oxley ( Sox ) Act Of 2002

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The Sarbanes-Oxley (SOX) Act of 2002 was legislated by Congress to restore reliability of financial statements with the objectives to raise standards of corporate accountability, to not only improve detection, but to also prevent fraud and abuse (Terando & Kurtenbach, 2009). Additionally, SOX was the response to general failure of business ethics such as the propagation of abusive tax shelters and greater aggressive tax avoidance strategies (Raabe, Whittenburg, Sanders, & Sawyers, 2015).
Tax Advantages of Sarbanes-Oxley
Considering the tax planning, SOX identify the potential risks of the similar firm conducting both tax services and auditing for a business by changing the relationship between the audit Committee of company and external auditors, thus providing a new obligation for the tax services to be pre-approved by the audit committee while the auditors are not limited from the tax services they can offer (Piotroski & Srinivasan, 2007). The Security Exchange Commission specifies that the audit committee in charge of retention and appointment of auditors must examine first, transactions primarily suggested by the accountant of the firm, secondly transactions which the only purpose is tax evasion, and lastly the treatment of tax that may not be assisted by the Internal Revenue Code of the United States and associated regulations (Piotroski & Srinivasan, 2007). Tax evasion constitutes the illegal nonpayment of tax and cannot be condoned (Raabe, et al., 2015). Those three
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