Sarbanes Oxley Act 2002
Sarbanes-Oxley Act 2002
Edwina Wilson
ACC 561
November 25, 2014
Dr. Carolyn Harold
Sarbanes–Oxley Act was introduced into law July 30, 2002. It is named after the two sponsors, U.S. Senator Paul Sarbanes (D-MD) and U.S. Representative Michael G. Oxley (R-OH). The main objective of the act is to protect investors by improving the accuracy, reliability and accountability of corporate disclosures. New aspects were created by Sarbanes-Oxley for corporate accountability as well as new penalties for wrong doings. It was basically introduced after major corporate and accounting scandals including the scandals of Enron, WorldCom etc so that the same kind of scandals do not repeat again.
The Sarbanes-Oxley Act does not apply to privately held companies. The act contains 11 titles, or sections, ranging from additional corporate board responsibilities to criminal penalties, and requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the new law. Out of Sarbanes-Oxley the Public Company Accounting Oversight Board, or PCAOB was created and is charged with overseeing, regulating, inspecting and disciplining accounting firms in their roles as auditors of public companies. The act also covers issues such as auditor independence, corporate governance, internal control assessment, and enhanced financial disclosure.
Sarbanes–Oxley contains 11 titles that describe specific mandates and requirements for financial reporting. Each title consists of several sections, which are summarized below.
1. Public Company Accounting Oversight Board:
This title establishes the Public Company Accounting Oversight Board. It provides specific processes and procedures for compliance audits, policies for control purposes. Basically it provides an oversight of public accounting firms that do auditing.
2. Auditor Independence: It provides standards for external auditor independence, so that conflicts of interest can be minimized. It also
Edwina Wilson
ACC 561
November 25, 2014
Dr. Carolyn Harold
Sarbanes–Oxley Act was introduced into law July 30, 2002. It is named after the two sponsors, U.S. Senator Paul Sarbanes (D-MD) and U.S. Representative Michael G. Oxley (R-OH). The main objective of the act is to protect investors by improving the accuracy, reliability and accountability of corporate disclosures. New aspects were created by Sarbanes-Oxley for corporate accountability as well as new penalties for wrong doings. It was basically introduced after major corporate and accounting scandals including the scandals of Enron, WorldCom etc so that the same kind of scandals do not repeat again.
The Sarbanes-Oxley Act does not apply to privately held companies. The act contains 11 titles, or sections, ranging from additional corporate board responsibilities to criminal penalties, and requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the new law. Out of Sarbanes-Oxley the Public Company Accounting Oversight Board, or PCAOB was created and is charged with overseeing, regulating, inspecting and disciplining accounting firms in their roles as auditors of public companies. The act also covers issues such as auditor independence, corporate governance, internal control assessment, and enhanced financial disclosure.
Sarbanes–Oxley contains 11 titles that describe specific mandates and requirements for financial reporting. Each title consists of several sections, which are summarized below.
1. Public Company Accounting Oversight Board:
This title establishes the Public Company Accounting Oversight Board. It provides specific processes and procedures for compliance audits, policies for control purposes. Basically it provides an oversight of public accounting firms that do auditing.
2. Auditor Independence: It provides standards for external auditor independence, so that conflicts of interest can be minimized. It also