Effect of Unethical Behavior Article Analysis for Accounting

Topics: Public Company Accounting Oversight Board, Audit, Internal control Pages: 1 (340 words) Published: December 12, 2013
Effect on Unethical Behavior Article Analysis
The Sarbanes-Oxley Act of 2002 was intended to improve corporate governance and increase the transparency of financial audits. The legislation also could have significant effects on the public accounting industry. Sarbanes-Oxley Act (SOX) of 2002 has requires companies to repeat the section 404-certification process annually and to review processes and controls for changes on a quarterly basis. The Act also promises to make important improvements in the way that companies perceive their responsibility in terms of ethics, corporate governance and responsibility to shareholders. Sarbanes-Oxley Act (SOX) of 2002 prohibits Non-Audit Services Concurrently with Audit Services, that is, a registered public accounting firm from providing any non-audit service to a company while concurrently offering audit services. This bill attempts to restore investors ‘confidence in the accountants’ objectivity of clients’ books. While loopholes still remain, Sarbanes-Oxley Act appears to alleviate some of investor’s concerns about the objectivity of CPAs (Cosgrove, 2006). Sarbanes-Oxley Act requires public accounting firms to register with the newly established Public Company Accounting Oversight Board (PCAOB). More important, it also significantly narrows the scope of non- audit services that can be provided to an audit client. The acts requires organizations to implement methods for the continual monitoring of the key internal controls and many companies have decided to delegate the responsibility for the review and updating of process documentation, and the testing of internal controls to process owners. The Sarbanes-Oxley Act of 2002, requires public companies to certify the adequacy of their internal controls for financial reporting purposes. Because of the Sarbanes –Oxley Act of 2002 companies are required to fully comply with their certification and reporting obligations and responsibilities by assuring that any financial...
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