Preview

Sarbanes Oxley Act Paper

Powerful Essays
Open Document
Open Document
934 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Sarbanes Oxley Act Paper
Running Head: SARBANES OXLEY ACT

Sarbanes Oxley Act

Introduction Sarbanes Oxley Act is focused towards identifying accounting frauds in different public companies. This paper discusses about various reasons for the introduction of Sarbanes Oxley Act and causes that has been overlooked.
Causes for Sarbanes-Oxley Act Sarbanes Oxley Act is US federal law, which is established in order to set out the some standards for accounting firms, public company boards and management. These standards are established in order to overcome the problem of accounting scandals. Companies such as Enron and WorldCom have created major accounting scandals. Sarbanes-Oxley Act protects the investors from the accounting scandals and frauds created by corporations (Vay, 2006). It has also introduced provision for the improvement in internal auditing of the firm. In addition to this financial reporting control mechanism has also enhanced, which helps in detecting the fraud easily. It has been analyzed that auditors are not able to detect the frauds easily. Manipulations in the financial records are not identified by the auditors and they rely on the false information within the financial statement. It has been analyzed that SOX eliminate the conflict of interest by threatening the auditing firm for the non-auditing business created by the auditors. It has been analyzed that Sarbanes Oxley Act helps in identifying the person, who is individually responsible for the fraud. Earlier court is not able to identify the exact person, who is responsible for committing the crime (Fletcher & Plette, 2008). Sarbanes Oxley Act requires attest of the concern person regarding the accuracy of financial statement. It has been analyzed that frauds created by many big companies such as Enron, WorldCom, etc. has arises the need of Sarbanes Oxley Act.
Causes Overlooked in Sarbanes Oxley Act It has been analyzed that Sarbanes Oxley Act do not focused towards



References: Fletcher, W.H. & Plette, T.N. (2008). The Sarbanes-Oxley Act: Implementation, Significance, and Impact. USA: Nova Publishers. Holt, M.F. (2007). The Sarbanes-Oxley Act: Costs, Benefits and Business Impact. USA: Butterworth-Heinemann. Mayo, H.B. (2010). Investments: An Introduction. USA: Cengage Learning. Shirley, J. (2002). International Law and the Ramifications of the Sarbanes-Oxley Act of 2002. Interrelationship: International Economic Law, 27(1), 2-29. Vay, D.L.D. (2006). The Effectiveness of the Sarbanes-oxley Act of 2002 in Preventing And Detecting Fraud in Financial Statements. USA: Universal-Publishers.

You May Also Find These Documents Helpful

  • Better Essays

    Sarbanes Oxley Act of 2002

    • 1322 Words
    • 4 Pages

    Descriptions of the main aspects of the regulatory environment which will protect the public from fraud within corporations are going to be provided in this paper. A special attention to the Sarbanes – Oxley Act of 2002 (SOX) requirement; along with an evaluation of whether Sarbanes-Oxley Act will be effective in avoiding future frauds based on their implemented rules and regulations.…

    • 1322 Words
    • 4 Pages
    Better Essays
  • Best Essays

    Sarbanes Oxley Act

    • 3132 Words
    • 13 Pages

    Financial reporting has been dissected over and over again by legislation. The U.S. Securities and Exchange Commission (SEC) hold the key to providing protection and integrity when companies are submitting their financial statements. Although their mission is to provide order and efficiency for financial markets, insidious plans are still developed by companies which ultimately result in turmoil to the economy. To provide a safeguard to investors, the Sarbanes-Oxley Act (SOX) was passed by congress in 2002, which was constructed because of fraudulent acts of well-known companies such as Enron. Before the SOX was inaugurated, two sets of accounting rules were used as guides for CPA firms.…

    • 3132 Words
    • 13 Pages
    Best Essays
  • Powerful Essays

    Sarbanes-Oxley Act of 2002

    • 1496 Words
    • 6 Pages

    I have written this report in order to fulfill my graduation requirements at Southwestern College. Also to become more knowledgeable on the Sarbanes-Oxley Act of 2002 (SOX) and the impact it has had on the business world.…

    • 1496 Words
    • 6 Pages
    Powerful Essays
  • Good Essays

    The Sarbanes-Oxley Act (SOX) originated on July 29, 2002 due to fraudulent bookkeeping practices and misleading financial reports from large corporations. These practices created a number of accounting scandals, which resulted in this in the government creating such an act. The purpose was to prevent and punish corporate corruption and, along the way, try to repair investor confidence. The law was passed by congress after well-known companies (Enron, Peregrine Systems and Tyco International, to name a few) caused great humiliations to its investors, which in result cost them billions of dollars. The share prices of the affected companies collapsed, which shook public confidence in the nation’s securities markets.…

    • 433 Words
    • 2 Pages
    Good Essays
  • Powerful Essays

    Sarbanes Oxley Memo

    • 1426 Words
    • 6 Pages

    As consultants for Ancher Public Trading (APT), Learning Team A would like to discuss the implications of the Sarbanes-Oxley (SOX) legislation. This memorandum provides a brief history of SOX¡¦s creation, explains the relationship amongst the FASB, SEC and PCAOB, describes the pros and cons of SOX, assesses the impacts of SOX, and lists ethical considerations of SOX.…

    • 1426 Words
    • 6 Pages
    Powerful Essays
  • Best Essays

    Sarbanes-Oxley Act of 2002

    • 4123 Words
    • 17 Pages

    Policy Paper on the Sarbanes-Oxley Act of 2002 Randy Ibrahim [SID: 860866350] Business 102 December 09, 2010 Dr. Sean D. Jasso…

    • 4123 Words
    • 17 Pages
    Best Essays
  • Powerful Essays

    Six Years of the Sarbanes-Oxley Act: Are We Better Off? By Dodwell, William J: The CPA Journal, August 1 2008…

    • 941 Words
    • 4 Pages
    Powerful Essays
  • Better Essays

    Sarbanes Oxley Act

    • 1338 Words
    • 6 Pages

    Fraudulent activity and accountants being held responsible for their actions was something that the government thought was important to make sure there was no falsification and fraud happening behind closed doors so to ensure that ethical standards were met the Sarbanes Oxley Act was brought to legislature. This Act was enacted in 2002 which…

    • 1338 Words
    • 6 Pages
    Better Essays
  • Satisfactory Essays

    The Sarbanes-Oxley Act of 2002 was designed to help prevent any fraudulent information being displayed on any company’s financial statement. The benefits of using falsified information would be that more people internally and externally will want to invest in the company. For example, a company financially is not doing well, but on paper shows that they are can sell their stocks for an increased amount from what it would be if they were not doing well. When this law was implemented, it requires that businesses get their financial statements certified by a certain person who is certified to do so. This will help prevent any fraudulent information being used on a financial statement. One of the ways that companies tried to get around this act was to have their accounting firm certify the books; however, this was made illegal as well so that a third party comes in and certifies the books. Another conflict of interest that was shown when this act came into place was the relationship between a company’s CEO and CFO with the auditors of the company the person who audits a company does not report to their firm they report to a board of directors for the company. Having this act in place not only arises so many areas of conflict that a supervisor can only supervise a certain client for five years in an auditing company. This means after five years of a customer they need to be moved. Hooper C. (2010 July 9).…

    • 433 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    In 2002, after accounting fraud at Enron and WorldCom, Congress passed the Sarbanes-Oxley to establish a system of federal oversight of corporate accounting practices in response to corporate accounting scandals, and restore stakeholders’ confidence. The Sarbanes-Oxley Act requires that corporations take “greater responsibility for their decisions and to provide leadership based on ethical principles”. For instance, the Sarbanes-Oxley Act makes the CEOs and CFOs personally liable for the credibility and accuracy of their companies’ financial statements.…

    • 1087 Words
    • 5 Pages
    Good Essays
  • Powerful Essays

    www.ziffdavis.comBumgardner, Larry. "Reforming Corporate America: How does the Sarbanes-Oxley Act impactAmerican business?" Graziadio Business Report. Vol. 6, no. 1, 2003.…

    • 4791 Words
    • 17 Pages
    Powerful Essays
  • Good Essays

    The goals of the Sarbanes-Oxley Act are expansive, including the improvement of the quality of audits in an attempt to eliminate fraud in order to protect the public’s interest, as well as for the protection of the investors (Donaldson, 2003). Prior to the implementation of SOX auditors were self-regulated with consumers reliant on their honesty and integrity. However, the auditing profession failed at self-regulation, thus necessitating the implementation of a security measure that would protect the investors and the public and restore confidence in the accounting profession. SOX was the response by the federal government, augmenting the role of auditors in enforcing federal securities laws against fraud and theft within public companies. (Coates, 2007) Additionally, SOX emphasizes executive responsibility and the improvement of disclosures and financial reporting (Donaldson, 2003).…

    • 770 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Policy Paper Sarbanes-Oxley

    • 5149 Words
    • 21 Pages

    I started to think about what type of a Law or a bill I would do for my policy paper, and it dawned on me after a week of thought and brainstorming that my uncle who was a Software Engineer at Enron had gotten laid off. He never likes to talk about it, but knowing that he had lost half of what he had earned in his entire life, was gone in an instant, motivated me to choose Sarbanes Oxley Act as my policy paper. I was unable to speak to my uncle about his previous job at Enron, but keeping in mind how he has become successful again in his life motivated even more. Dr. Jasso had mentioned Sarbanes Oxley Act in class quite a few times, and used it as a key example for his lecture also. I knew the surface of what Enron had done, but did not know a lot about how Sarbanes Oxley Act was related to it. I will start off with a prologue of what the Sarbanes Oxley Act is, and later going in detail about the Act.…

    • 5149 Words
    • 21 Pages
    Powerful Essays
  • Satisfactory Essays

    The Sarbanes-Oxley Act is a mandatory legislation which had came into force in 2002 with the changes in regulation of corporate governance and of financial practice. There are Periodic Statutory financial reports which are to include certification that the financial statements and related information fairly prestent the financial condition and the results in all material respects information on any fraud that involves employees who are involved with internal activities. There are some requirements that the organizations will not try to avoid by reincorporating in the activities or trasferring the activties outside of the United States. The certification of financial statements should be published and requires issuers of reports to inform the…

    • 383 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    The Sarbanes-Oxley Act is a “federal law that is a comprehensive reform of business practices.” This law set standards for public accounting firms, corporate management, and corporate boards of directors. After a several accounting scandals between the years 2000-2002 is connected because it reminds the people that new laws needed to be passed…

    • 169 Words
    • 1 Page
    Satisfactory Essays