May 15, 2015
Sarbanes-Oxley Act of 2002 Analysis
The American government has taken significant measures to protect the public from fraud with-in corporations. Many federal laws have been enacted, regulatory bodies created and empowered to monitor and enforce those laws. The Sarbanes-Oxley Act, (SOX), of 2002 was an attempt to address several violations to the public trust from corporations that continued to occur despite the previous attempts to govern corporate responsibility to the public. This act specifically tried to reduce unethical corporate behavior and increase public confidence in the financial reporting of corporations (Kimmel, Weygandt, & Kieso, 2011). This paper will address if the requirements of SOX will be enough to prevent future fraud in the corporate environment.
Regulatory Environment Several laws and regulations have been developed to attempt to control business practices. Corporations must follow rules that were established to protect the public from fraud such as fair practice laws, and regulatory agencies must ensure compliance with these long-standing regulations. The U.S. Securities and Exchange Commission, (SEC), “was developed to help protect investors, maintain fair, orderly, and efficient markets, and facilitate capital information” (U.S. Securities and Exchange Commission, 2015). The SEC was created in 1934 in response to the loss of public confidence in financial markets after the stock market crash of 1929 and the years following the Great Depression. The main goal of establishing the SEC was to restore investor confidence in the markets by providing more precise and reliable information for investors and creating an environment that protected the investor first. Both public and private investors can invest in corporations, and the SEC requires disclosure of meaningful financial information so that those investors can make sound investment decisions (U.S. Securities and Exchange
References: Kimmel, P., Weygandt, J., & Kieso, D. (2011). Accounting: Tools for Business Decision Making» (4th ed.). Hoboken, NJ: Wiley & Sons, Inc. Stephens, D. O. (2005). The Sarbanes-Oxley Act: Record management implications. Records Management Journal, 15(2), 98-103. Tillman, B., & Fares, A. (2002). Who 's afraid of Sarbanes-Oxley? Information Management Journal, 36(6), 16-21. Retrieved from http://search.proquest.com/docview/227765609?accountid=458 U.S. Securities and Exchange Commission. (2015). The Investor 's Advocate: How the SEC Protects Investors, Maintains Market Integrity, and Facilitates Capital Formation. Retrieved from http://www.sec.gov/about/whatwedo.shtml#create