Sarbanes Oxley Scenario
Sarbanes Oxley Act
LAW/421
January 31, 2014
Cornelius Perry
In the United States, there are many businesses that are going through tough times in this economy, and some of the “little” or smaller ones are slowly having to close their doors for business over changes to certain laws over the recent decade. They are having to deal with big fines and account for audits on the very businesses they own and manage. One of the biggest new things or changes is that every business has to go through an internal and external audit each year. This change is the Sarbanes Oxley Act of 2002. And, the audits themselves can be and are rather expensive. The businesses have to hire pros from within for one audit and another from outside for the external audit. This is not very cost effective for most small businesses.
In recent times, many energy companies have been experiencing vast amounts of success, in the nineties and early part of the new millennium, They were showing extremely high profits and flourishing greatly. Companies like Tyco, Worldcom, Enron and others were using unethical practices , which not only cost their investors money, but also this made the general public have no faith in the securities markets. It, the trust, was very non-existent, and understandably so. These companies had executives attempting to hide funds and bad practices from the boards and directors that were there and in place to govern their business practices in order to keep the business running smoothly, it did not work for some. Enron was famous or infamous, for this practice of unethical dealings. Which is why they were the face/poster boys for bad business, they even took the name off of the Baseball Stadium that it was emblazoned on. With the Sarbanes Oxley Act, smaller businesses were affected more than the bigger guys. Remember, they had to pay for inside and outside audits, like hiring accounting firms to perform said audits. And, in many instances, the smaller guys were
LAW/421
January 31, 2014
Cornelius Perry
In the United States, there are many businesses that are going through tough times in this economy, and some of the “little” or smaller ones are slowly having to close their doors for business over changes to certain laws over the recent decade. They are having to deal with big fines and account for audits on the very businesses they own and manage. One of the biggest new things or changes is that every business has to go through an internal and external audit each year. This change is the Sarbanes Oxley Act of 2002. And, the audits themselves can be and are rather expensive. The businesses have to hire pros from within for one audit and another from outside for the external audit. This is not very cost effective for most small businesses.
In recent times, many energy companies have been experiencing vast amounts of success, in the nineties and early part of the new millennium, They were showing extremely high profits and flourishing greatly. Companies like Tyco, Worldcom, Enron and others were using unethical practices , which not only cost their investors money, but also this made the general public have no faith in the securities markets. It, the trust, was very non-existent, and understandably so. These companies had executives attempting to hide funds and bad practices from the boards and directors that were there and in place to govern their business practices in order to keep the business running smoothly, it did not work for some. Enron was famous or infamous, for this practice of unethical dealings. Which is why they were the face/poster boys for bad business, they even took the name off of the Baseball Stadium that it was emblazoned on. With the Sarbanes Oxley Act, smaller businesses were affected more than the bigger guys. Remember, they had to pay for inside and outside audits, like hiring accounting firms to perform said audits. And, in many instances, the smaller guys were
References: “The Sarbanes Oxley Act” (2002), William J. Carney, (2004), Engles, Hayes and Wang,(2005) The Sarbanes Oxley Act and Firms going private, Qian, Strahan, and Zhu, (2009), UOP, (University of Phoenix) , Public Law, 107-204