Sarbanes-Oxley
Issues surrounding corporate accounting fraud emerged with great controversy during the Enron Scandal. Enron was most famously known for buying and selling energy, in addition to its creative business strategies. Keller ((2012)), "Enron used Wall Street magic to transform energy supplies into financial instruments that could be traded online like stocks and bonds. These contracts guaranteed customers a steady supply at a predictable price or at least that’s what Enron wanted investors to believe” (Enron for Dummies). The company misled the public and its investors into believing it was experiencing growth in revenue when in actuality it was losing big and hiding the losses behind bogus partnerships. The Chief Executives, Kenneth Lay and Jeffrey Skilling were collectively found guilty of fraud, conspiracy, insider trading and bank fraud Enron’s unethical practices led to substantial losses for its investors and highlighted the need for major regulatory reform.
On July 30, 2002, President George W. Bush signed the Sarbanes-Oxley Act (SOX) into law. According to "U.S. Securities And Exchange Commission" ((2013)), “the act was designed to establish “reforms that enhance corporate responsibility, financial disclosures and to combat corporate and accounting fraud. Additionally, the act resulted in the creation of the Public Company Accounting Oversight Board which oversees the activities of the auditing profession” (Sarbanes-Oxley Act of 2002).
The following sections express the compliance initiatives expressed within the SOX act:
Corporate Responsibility for Financial Reporting
Section 302 requires that signing officers review all financial reports to ensure they do not contain any material omissions, untrue statements or misleading content. Officers are also required to ensure that financial statements accurately represent the financial condition of the organization. Signing officers must implement internal controls and report their findings in a
On July 30, 2002, President George W. Bush signed the Sarbanes-Oxley Act (SOX) into law. According to "U.S. Securities And Exchange Commission" ((2013)), “the act was designed to establish “reforms that enhance corporate responsibility, financial disclosures and to combat corporate and accounting fraud. Additionally, the act resulted in the creation of the Public Company Accounting Oversight Board which oversees the activities of the auditing profession” (Sarbanes-Oxley Act of 2002).
The following sections express the compliance initiatives expressed within the SOX act:
Corporate Responsibility for Financial Reporting
Section 302 requires that signing officers review all financial reports to ensure they do not contain any material omissions, untrue statements or misleading content. Officers are also required to ensure that financial statements accurately represent the financial condition of the organization. Signing officers must implement internal controls and report their findings in a
References: Keller, B. ((2012)). The New York Times. Retrieved from http://www.nytimes.com/2002/01/26/opinion/enron-for-dummies.html?pagewanted=all&src=pm U.S. Securities and Exchange Commission. ((2013)). Retrieved from http://www.sec.gov/about/laws.shtml#sox2002