From the e-Activity, recommend how the SOX framework can ensure reliable and complete financial information and how accounting professionals have benefitted from its use. Provide support for your response.
The Sarbanes-Oxley Act of 2002 (often shortened to SOX) is legislation enacted in response to the high-profile Enron and WorldCom financial scandals to protect shareholders and the general public from accounting errors and fraudulent practices in the enterprise. The act is administered by the Securities and Exchange Commission (SEC), which sets deadlines for compliance and publishes rules on requirements. Sarbanes-Oxley is not a set of business practices and does not specify how a business should store records; rather, it defines which records are to be stored and for how long.
Evaluate how the SOX has reinforced investors’ and creditors’ confidence in companies and how these individuals can take steps to verify the accuracy of the financial statements of potential investments or loans. Provide support for your rationale.
• Auditors, analysts, and legal counsel who were not traditionally considered components of corporate governance are now brought into the realm of internal governance as gatekeepers.
• The legal status and fiduciary duty of company directors and officers have been more clearly defined and significantly enhanced.
• Certain aspects of state corporate law were preempted and federalized.
• SOX applies equally to and is intended to benefit all publicly traded companies, although many provisions are also relevant to private and not-for-profit organizations.
Source: Chapter 1 Wiley Plus.
From the e-Activity research you gathered, analyze how you, as the Chief Financial Officer (CFO) of a “big box store” that has potential pollution, environmental-disposal, or demolition problems, would handle these costs in your financial statements and communicate...
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