The Burden of the Sarbanes Oxley Act
Table of Contents Executive Summary 3 Introduction 4 Sarbanes Oxley Act 2002: The Burden it places on companies 5 Cost of Compliance 5 Cost of Finance to U.S Companies 5 Fees and Audit 6 Reduced Competition 7 Conclusion 8 References 9
The Sarbanes Oxley Act, named after its two main sponsors, Senator Paul Sarbanes and Congressman Mike Oxley is a legislation that must be complied by all business in the U.S. The act consists of 11 titles and 66 sections and was drafted after the stock market disaster in the 1990’s. The act has its positives and negatives but the focus on this assignment would be on the negatives mainly the burdens it puts on companies trading on the stock exchange.
Ever since the introduction of the Sarbanes-Oxley Act (SOX) in 2002 there have been debates over the benefits and drawbacks of such a legislation. While they really isn’t much we can do about it now as its being already enforced the arguments still stands.
Signed into law in July 2002, the Sarbanes Oxley Act encourages managers and auditors to ensure that the information on the financial statements were accurate. Due to this many companies have had to re-evaluate their accounting practises before subjecting those practises to the standards required by SOX.
Sarbanes Oxley Act 2002: The Burden it places on companies
Many economist and financial personnel believe it’s just another burden on business and I can’t help but listen to their dispute seeing as it was made to protect businesses from having misleading information on their accounts. It’s a funny dispute as one of Sarbanes key objectives was to restore investors’ confidence after the whole Enron scandal and others which took place. This fraudulent actions were the catalysts for this act to be enforced.
Now I will try and state the negatives experienced through the initiation of the Sarbanes Oxley