Sox Act of 2002
Sarbanes Oxley Act of 2002
Daniel Alvalle
BUS 670 Legal Environment
Instructor: Peter McCann
7/29/2013
If you were an investor would you want your money protected? Would you be skeptical about investing in companies since the securities fraud scandals that have happened recently? The answer is most likely, “yes”, to a certain degree. With the news about unethical business practices and companies not following regulatory guidelines, it is difficult to ignore the risk that is involved with trusting someone else with your investment. But there is an answer to help protect companies and shareholder, and it comes in the form of a regulatory organization that was put in place in 2002. That was put in place as a direct response to the corporate scandals of Enron and other scandals that followed, and was also put in place to help restore confidence in the financial market. SOX-Applies only to US companies on the US exchange, and is an Act put in place in 2002 to mandate all publicly traded corporations to maintain adequate internal control. SOX basically make sure that all US publicly traded corporation do what is in the best interest to protect the investment of stockholders. SOX-Sarbanes-Oxley Act of 2002 is an ACT that was put in place where all publicly traded U.S. corporations are required to follow certain guidelines and requirements. Basically, these systems were put in place because of securities fraud issues that came to light in the early 2000’s, and are put in place to help minimize and eliminate fraud, to ensure accurate record keeping and reporting as well as to protect investors (Kimmel, Paul D. (2011-06-28). One key component is a Code of ethics requirement which provides a guideline for internal corporate governance. These standards outline standards for corporate Officers, Directors, employees, and even its internal auditors. Another key component and mandatory requirement of SOX is for the company to hire an
Daniel Alvalle
BUS 670 Legal Environment
Instructor: Peter McCann
7/29/2013
If you were an investor would you want your money protected? Would you be skeptical about investing in companies since the securities fraud scandals that have happened recently? The answer is most likely, “yes”, to a certain degree. With the news about unethical business practices and companies not following regulatory guidelines, it is difficult to ignore the risk that is involved with trusting someone else with your investment. But there is an answer to help protect companies and shareholder, and it comes in the form of a regulatory organization that was put in place in 2002. That was put in place as a direct response to the corporate scandals of Enron and other scandals that followed, and was also put in place to help restore confidence in the financial market. SOX-Applies only to US companies on the US exchange, and is an Act put in place in 2002 to mandate all publicly traded corporations to maintain adequate internal control. SOX basically make sure that all US publicly traded corporation do what is in the best interest to protect the investment of stockholders. SOX-Sarbanes-Oxley Act of 2002 is an ACT that was put in place where all publicly traded U.S. corporations are required to follow certain guidelines and requirements. Basically, these systems were put in place because of securities fraud issues that came to light in the early 2000’s, and are put in place to help minimize and eliminate fraud, to ensure accurate record keeping and reporting as well as to protect investors (Kimmel, Paul D. (2011-06-28). One key component is a Code of ethics requirement which provides a guideline for internal corporate governance. These standards outline standards for corporate Officers, Directors, employees, and even its internal auditors. Another key component and mandatory requirement of SOX is for the company to hire an
References: Bhamornsiri, S., Guinn, R., & Schroeder, R. (2009). International Implications of the Cost of Compliance with the External Audit Requirements of Section 404 of Sarbanes–Oxley. Retrieved from: web.ebscohost.com Chairman Donaldson W.H. (2005). Testimony Concerning the Impact of the Sarbanes-Oxley Act. Retrieved from: https://www.sec.gov/news/testimony/ts042105whd.htm Drawbaugh K. and Aubin D. (2012). Analysis: A decade on, is Sarbanes-Oxley working? Retrieved from: http://www.reuters.com/article/2012/07/29/us-financial-sarbox-idUSBRE86Q1BY20120729 Ferrell, O. O., & Ferrell, L. (2011). The Responsibility and Accountability of CEOs: The Last Interview with Ken Lay. Journal of Business Ethics Gifford, R. H., & Howe, H. (2004). Regulation and Unintended Consequences: Thoughts on Sarbanes-Oxley. Retrieved from: web.ebscohost.com Kimmel, Paul D. (2011-06-28). Financial Accounting: Tools for Business Decision Making, 6th Edition. Linck, J. S., Netter, J. M., & Yang, T. (2009). The Effects and Unintended Consequences of the Sarbanes-Oxley Act on the Supply and Demand for Directors. Retrieved from: web.Ebscohost.com Lisa, M. P., O 'Sullivan, S.,A., & Shannon, J. H. (2007). Sarbanes-oxley: An overview of current issues and concerns. Review of Business, 27(3), 38-46. Retrieved from http://search.proquest.com Lonsdale J.T. (2002). Sarbanes-Oxley Act Draws Criticism. Retrieved from: http://securities.stanford.edu/news-archive/2002/20020920_Headline08_Lonsdale.htm Washington, D.C. (2013). SEC Charges City of Harrisburg for Fraudulent Public Statements. Retrieved from: http://www.sec.gov/news/press/2013/2013-82.htm