Sarbanes Oxley Effectiveness
In the United States public corporations are always trying to earn more and intice more investors. Sometimes this makes public companies act unlawfully and commit fraud to keep the company going. Lawmakers are trying to prevent this fraud and protect the investors
In 2002 President Bush signed the Sarbanes Oxley Act to protect the investors. “The Sarbanes Oxley Act mandated strict reforms to improve financial discloser from corporations and prevent accounting fraud (Investopedia.com)”. This act also established the Public Company Accounting Oversight Board (PCAOB). “The PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors and the public interest by promoting informative, accurate, and independent audit reports.”(PCAOBUS. Org). Many find that this act has helped the prevention of fraudulent activities of businesses. “A PricewaterhouseCoopers Management Barometer survey of 136 CFOs and managing directors in June found 91% had made changes in controls and compliance practices as a result of the law, compared with 85% of the same group surveyed in October 2002.”(Hoffman, 2003). This study has shown that within the year that Sorbanes Oxley has been inacted that companies have made improvements and complyed with the law. Others say that the act won’t prevent fraud or loopholes that allow fraud to happen. A good way to improve the law is to increase penatles and hold more corpoartions liable instead of just the individuals who have committed the crime. This will help keep every employee vigilant against others committing the fraud.
The PCAOB has been established because of the Sarbanes Oxley Act. This board has impacted auditors and accounting firms. This board set standards on which auditors and accounting firms must abide by. PCAOB has the right to do inspections on the audits from these firms and auditors. The PCAOB fail the inspections and...
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