The Sarbanes-Oxley Act of 2002 established a new five-person board to oversee financial accounting in publicly traded corporations. The board is appointed by the Securities and Exchange Commission. Prior to the creation of this board the industry relied primarily on self-regulation through the American Institute of Certified Public Accountants. Do you think the establishment of the new oversight board was a good idea or should the profession have continued to be self-regulated?
In 2002 there was a new act that came in tact, appointed by the Securities Exchange commissions, the Sarbanes-Oxley act put in place a new requirement that there must be a board of five people to always monitor the financial accounting for public corporation. This was established mainly to protect investors, because investors lost billions from Enron and other companies that went bankrupt. The reason why I think that this was a good idea because there were too many problems when the professions was self regulation. I think that the addition of the five member board is a great idea because it will be able to identify anything that the American Institute of Certified Public accountants might missed or over see their reports. With another organization overseeing things I believe that companies such as Enron and Arthur Andersen will be more on their partners backs to make sure that everything is done correctly. This will also mean that the partners would likely to be honest and not only the interest of themselves but also the interest of the company and every on else that is involved. Another reason why I think that it was a good idea to establish the board is because Sarbanes-Oxley started requiring that management show proof of financial statements. Additionally the work load for the board of directors was increased , this also give auditors the ability to work independently. The Sarbanes-Oxley Act of 2002 also limits corporations from working directly with accounting firms, the CEO's...
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