Analysis of the Sarbanes Oxley Act of 2002
Five Provisions of the Sarbanes Oxley Act of 2002
In July 2002, the Sarbanes-Oxley Act came into force by introducing radical changes to the regulation of corporate governance and financial practices. The Sarbanes-Oxley Act of 2002 is a law passed in response to the financial indignities such as Enron, Tyco, and WorldCom. These indignities shook the confidence in investors and required an overhaul of the regulatory standards. The Act contains several provisions, which include compliance, rules, and requirements. The Securities and Exchange Commission (SEC) administers the Act and deals with compliance, rules, and requirements. The Public Company Accounting Oversight Board (PCAOB) is in charge of overseeing, regulating, inspecting, and disciplining accounting firms. Analysis on Five Provisions of the Sarbanes Oxley Act of 2002 The Sarbanes-Oxley Act of 2002, known as SOX, was introduced by Senator Paul Sarbanes and Representative Michael Oxley. SOX called one of the broadest sweeping legislation to improve public accounting in corporations since the securities acts of 1933 and 1934. The Sarbanes-Oxley Act, enacted January 2002 was due to numerous corporate scandals, including Arthur Anderson, Enron, Global Crossing, Tyco, and WorldCom. The Act meant to address financial practices and corporate governance due to widespread flaws in the way corporations reported their financial numbers for decades. One objective of the Act is to improve the truthfulness and dependability of corporate disclosures in order to protect investors. The Act created new standards for corporate responsibility as well as penalties for acts of wrongdoing; it also set a number of deadlines for compliance. The Sarbanes-Oxley Act of 2002 applies to both large and small organizations and to U.S. public companies and international companies that have registered with the Securities and Exchange Commission. The Act...
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