Sarbanes Oxley Act Paper
Running Head: SARBANES OXLEY ACT
Sarbanes Oxley Act
Introduction Sarbanes Oxley Act is focused towards identifying accounting frauds in different public companies. This paper discusses about various reasons for the introduction of Sarbanes Oxley Act and causes that has been overlooked.
Causes for Sarbanes-Oxley Act Sarbanes Oxley Act is US federal law, which is established in order to set out the some standards for accounting firms, public company boards and management. These standards are established in order to overcome the problem of accounting scandals. Companies such as Enron and WorldCom have created major accounting scandals. Sarbanes-Oxley Act protects the investors from the accounting scandals and frauds created by corporations (Vay, 2006). It has also introduced provision for the improvement in internal auditing of the firm. In addition to this financial reporting control mechanism has also enhanced, which helps in detecting the fraud easily. It has been analyzed that auditors are not able to detect the frauds easily. Manipulations in the financial records are not identified by the auditors and they rely on the false information within the financial statement. It has been analyzed that SOX eliminate the conflict of interest by threatening the auditing firm for the non-auditing business created by the auditors. It has been analyzed that Sarbanes Oxley Act helps in identifying the person, who is individually responsible for the fraud. Earlier court is not able to identify the exact person, who is responsible for committing the crime (Fletcher & Plette, 2008). Sarbanes Oxley Act requires attest of the concern person regarding the accuracy of financial statement. It has been analyzed that frauds created by many big companies such as Enron, WorldCom, etc. has arises the need of Sarbanes Oxley Act.
Causes Overlooked in Sarbanes Oxley Act It has been analyzed that Sarbanes Oxley Act do not focused towards
Sarbanes Oxley Act
Introduction Sarbanes Oxley Act is focused towards identifying accounting frauds in different public companies. This paper discusses about various reasons for the introduction of Sarbanes Oxley Act and causes that has been overlooked.
Causes for Sarbanes-Oxley Act Sarbanes Oxley Act is US federal law, which is established in order to set out the some standards for accounting firms, public company boards and management. These standards are established in order to overcome the problem of accounting scandals. Companies such as Enron and WorldCom have created major accounting scandals. Sarbanes-Oxley Act protects the investors from the accounting scandals and frauds created by corporations (Vay, 2006). It has also introduced provision for the improvement in internal auditing of the firm. In addition to this financial reporting control mechanism has also enhanced, which helps in detecting the fraud easily. It has been analyzed that auditors are not able to detect the frauds easily. Manipulations in the financial records are not identified by the auditors and they rely on the false information within the financial statement. It has been analyzed that SOX eliminate the conflict of interest by threatening the auditing firm for the non-auditing business created by the auditors. It has been analyzed that Sarbanes Oxley Act helps in identifying the person, who is individually responsible for the fraud. Earlier court is not able to identify the exact person, who is responsible for committing the crime (Fletcher & Plette, 2008). Sarbanes Oxley Act requires attest of the concern person regarding the accuracy of financial statement. It has been analyzed that frauds created by many big companies such as Enron, WorldCom, etc. has arises the need of Sarbanes Oxley Act.
Causes Overlooked in Sarbanes Oxley Act It has been analyzed that Sarbanes Oxley Act do not focused towards
References: Fletcher, W.H. & Plette, T.N. (2008). The Sarbanes-Oxley Act: Implementation, Significance, and Impact. USA: Nova Publishers. Holt, M.F. (2007). The Sarbanes-Oxley Act: Costs, Benefits and Business Impact. USA: Butterworth-Heinemann. Mayo, H.B. (2010). Investments: An Introduction. USA: Cengage Learning. Shirley, J. (2002). International Law and the Ramifications of the Sarbanes-Oxley Act of 2002. Interrelationship: International Economic Law, 27(1), 2-29. Vay, D.L.D. (2006). The Effectiveness of the Sarbanes-oxley Act of 2002 in Preventing And Detecting Fraud in Financial Statements. USA: Universal-Publishers.