My opinion of the Sarbanes Oxley Act of 2002 (SOX)
The government is charged with the responsibility of protecting its citizens. This responsibility is extended not only to administering punishment through enforcement of legislation but also to preventing occurrences through the enactment of laws to protect their citizens. The government had to act. The great fall that was the result of corporate and accounting fraud, in the early twenty-first century nearly destroyed the economical welfare of the country. The Sarbanes Oxley Act of 2002 created the Public Company Accounting Oversight Board (PCAOB) which is a regulatory oversight entity which oversees publically traded companies to protect the investors, consumers and American people from unethical criminals. The government did what they should have, which is stepped in to secure the protection of its citizens and increase confidence in the country’s financial infrastructure. This is why I believe the Sarbanes Oxley Act of 2002 was a necessity in gaining the confidence of the American people in our economic system. What other part of the Act did you find interesting.
The part of the SOX act that I find the most interesting is the PCAOB response to the corruption by the auditors who support and condone the illegal actions of the company. According to Section 404 of SOX the auditor must attest to the publically traded company effective management of the internal control of issuers for financial reporting. Section 404 requires the auditor to attest to through a report on the management’s assessment of its own internal controls. This is interesting because it sets up two levels of accountability and transparency and holds both the management of the company and the outside auditor accountable to their findings. Provide a specific example how the act increased ethical requirements of the auditor and increased auditor liability. In an effort to increase consumer confidence and restore the economic balance in our...
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