Why In 2002 Sarbanes-Oxley Act (SOX)

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Accounting Regulation Enron and WorldCom was the reason why in 2002, Sarbanes-Oxley Act were passed. This Federal law were passed in order to not only protects investors from accounting fraud, but it also prevents these corporate scandals from happening. SOX aims directly at public accounting firms that participate in financial audits of corporations. Even though it increases that cost of accounting services for many company, it has been proven that it has improved corporate governance, ethics and audit quality. This act not only affects publicly held corporations, but smaller firms are also affected. Most likely because local and state lawmakers will extend similar regulations throughout the accounting industry. Accounting services cost…show more content…
Although there have been accounting fraud since the implementation of SOX, it seems that the act has lessened the rate at which these scandals occur. Even though the Sarbanes-Oxley Act was implemented to fight accounting fraud, and increase regulations and oversight by the SOX, accounting fraud is almost too big to eradicate. Although, it can be significantly reduced, accounting fraud and scandals will remain to be a part of corporate America. References LLC, D. M. (n.d.). How the Sarbanes-Oxley Act of 2002 Impacts the Accounting Profession. Retrieved June 24, 2017, from Proposed Rule: Disclosure Required by Sections 404, 406 and 407 of the Sarbanes-Oxley Act of 2002. (n.d.). Retrieved July 10, 2017, from Starr, R. (n.d.). Ernst & Young: Governance is stronger, audit quality is improved ten years on with Sarbanes-Oxley. Retrieved July 10, 2017, from
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