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The Sarbanes-Oxley Act

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The Sarbanes-Oxley Act
Sarbanes-Oxley Act 2002
Sarbanes-Oxley Act 2002
The Sarbanes-Oxley Act is named after two Senators who were considered the architects of the act and setting into motion the deadlines for compliance with it. These Senators were Paul Sarbanes and Michael Oxley.
The Sarbanes-Oxley Act was brought into force in 2002 to help regulate financial practices of corporations. This was mostly due to the actions of Enron and WorldCom scandals. The management of these corporations was not being truthful with the public about the handling of the finances of the companies while taking large bonuses for themselves. The use of the Sarbanes-Oxley Act, no matter how large or small your organization is, must be followed.
The Act is broken down into eleven …show more content…
This section explains what is expected of the corporations in regards to reporting all financial dealings and being honest about them. It is stated that when a financial report is submitted, it needs to be accompanied by statements of both the chief financial officer and the CEO of the corporation. It is also stated in this section what can happen to the people that do not follow the rules. These penalties or fines can include a fine up to $1,000,000 or a prison term of at least 10 years or both. In addition, anyone that signs the statement and knows that it is not true will face a more severe penalty of up to $5,000,000 and 20 years in prison or …show more content…
Secondly, SOX is intended to keep companies from committing fraud against investors and institutions. When it came time to implement the SOX Act, the Securities and Exchange Commission had their hands full. It came with a hefty price. Expanding the scopes of all annual audits greatly increased the cost and liability to the companies preforming the audits, to the board members, and to the company executives. SOX also created a barrier that affects foreign corporations to operate in the United States. The Sarbanes-Oxley Act is a good thing for the American corporations. It has made them become more responsible for their actions and has made the dishonest executives’ pay for what they have done. The SOX Act has also helped to protect the public in general against future fraud and damages that might
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