Sarbanes-Oxley Act 2002

Senator Paul Sarbanes and Representative Michael Oxley created the act to keep businesses from producing false financial documents just to get investors to invest into the company because it appears that the business is doing very well. Companies like Enron under this new act couldn’t produce the false accounting statements without first having an auditor coming in and checking over the inventories or book keeping data. Now investors can relax a little more and not worry that the financial statements are falsified or are generalized and rounded up to make the company look good. Investors can trust that the auditors are doing their job and verifying the books and data for those companies.

The Sarbanes - Oxley Act of 2002 is the most important piece of legislation since the 1933 and 34 securities exchange act, affecting everything from corporate governance to the accounting industry and much more. This law was in direct response to the failure of corporate governance at Enron, Tyco, and WorldCom. The Sarbanes - Oxley seeks to bring back the confidence in all publicly held corporations to the shareholders, while placing more responsibility on CEOs and CFOs for the actions of the corporation. "Sarbanes - Oxley is more than just another piece of legislation - it has become synonymous with a new culture of corporate accountability and reform1." The SOX, as it has come to be known, covers a myriad amount of corporate

The Sarbanes-Oxley is a U.S. federal law that has generated much controversy, and involved the response to the financial scandals of some large corporations such as Enron, Tyco International, WorldCom and Peregrine Systems. These scandals brought down the public confidence in auditing and accounting firms. The law is named after Senator Paul Sarbanes Democratic Party and GOP Congressman Michael G. Oxley. It was passed by large majorities in both Congress and the Senate and covers and sets new performance standards for boards of directors and managers of companies and accounting mechanisms of all publicly traded companies in America. It also introduces criminal liability for the board of directors and a requirement by

The Sarbanes-Oxley can into play when the SEC conducted an investigation to determine if fraud exists in major corporations. The SEC request CEO’s and CFO's of the publicly-traded corporations file a sworn statement ensuring that the organization used integrity when it came to their financial statements and other documentation they file with the SEC that year. There

The Sarbanes-Oxley Act was a law created in 2002 to ensure that the boards of public companies oversee their companies in a more competent and transparent way in order to protect investors. Section 302 refers to the obligations of the corporate officers who sign the financial reports. The officers are responsible for verifying that the report is accurate and represents a true picture of the company’s financial condition. Section 401 states that The Commision must evaluate the financial reports. Section 404 covers the company’s internal control structure and the requirements of the accounting firm in assessing internal controls and reporting procedures. Section 409 requires a company to disclose information on changes to financial conditions or

In reaction to a number of corporate and accounting scandals which included Enron Congress passed The Sarbanes-Oxley Act of 2002 (SOX) (Sarbox) also known as the "Public Company Accounting Reform and Investor Protection Act” and the "Corporate and Auditing Accountability and Responsibility Act" was enacted July 30, 2002. The Sarbane-Oxley Act is a US federal law that created new and expanded laws regarding the requirements for all US public company boards, management, and accounting firms. The act has a number of provisions that apply to privately owned companies. The Act addresses the responsibilities of a public corporation’s Board of Directors, adds criminal penalties for misconduct, and requires the SEC to create regulations that define how public corporations are expected to comply with the law. The SOX increases the penalties a company pays for fraudulent financial activity, and requires top management to provide individual verification to certify the accuracy of financial information, while also increasing the oversight role of a company’s Board of Directors and the independence of outside auditors.

The purpose of the Sarbanes-Oxley Act is to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities law, and for other purposes. (Lander, 2004) The Act created new standards for public companies and accounting firms to abide by. After multiple business failures due to fraudulent activities and embezzlement at companies such as Enron Sarbanes and Oxley recognized a need for the revamping of our financial systems laws, rules and regulations. Thus, the Sarbanes-Oxley Act was born.

The Sarbanes-Oxley Act was enacted on July 30, 2002. It was enacted by the 107th United States Congress. It is named after sponsors U.S. Senator Paul Sarbanes and U.S. Representative Michael G. Oxley. It is also known as the ‘Public Company Accounting Reform and Investor Protection Act’ in the Senate and ‘Corporate and Auditing Accountability and Responsibility Act’ in the House. The main purpose of this act was to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes. This act was enacted as a result to a number of corporate and accounting scandals including those affecting Enron, Tyco internationals, Adelphia, Peregrine Systems, and WorldCom. The

According to the textbook, Sarbanes-Oxley Act is a federal statute enacted by Congress to improve corporate governance (Cheeseman, H. R., p.344). It was passed by congress that sets policy and regulates the accounting practices of U.S corporations.

After major corporate and accounting scandals like those that affected Tyco, Worldcom and Enron the Federal government passed a law known as the Sarbanes-Oxley Act of 2002 also known as the Public Company Accounting Reform and Investor Protection Act. This law was passed in hopes of thwarting illegal and misleading acts by financial reporters and putting a stop to the decline of public trust in accounting and reporting practices. Two important topics covered in Sarbanes-Oxley are auditor independence and the reporting and assessment of internal controls under section 404.

The Sarbanes-Oxley Act of 2002, also known as the SOX Act, was created in response to the series of misleading and outright fraudulent activity of big business in 1990s (Lasher, 2008, p. 187). Multiple publicly-traded businesses raised up their stock prices by “publishing false or deceptive financial statements” (Lasher, 2008, p. 187). The most notable company to crash were Enron, WorldCom and Tyco. Eventually almost one thousand publicly traded companies restated their financial statements which resulted in almost $6 trillion of stock market value disappearing (Lasher, 2008, p. 187). In response to these events, Congress drafted and passed the Sarbanes-Oxley Act (SOX) of 2002.

What is The Sarbanes-Oxley Act? “With more than half of all American households invested in U.S. public companies, the discoveries of financial reporting and auditing improprieties at Enron and numerous other public companies beginning five years ago swelled in 2002 to a national crisis in confidence in the integrity and reliability of public companies’ financial statements and of external audits.” This act of 2002 is a legislation passed by the U.S. Congress to guard shareholders and the general public against accounting errors and fraudulent practices in the enterprise, as well as improve the accuracy of corporate disclosures. SOX defines individual accountability and requires employees to construct an investigation of a business or person before signing a

The Sarbanes-Oxley Act was signed into law in 2002 and it was ment to ensure that publicly traded companies complied with policies that made their financial records honest and not distorted to make them look better or to make them look worse. This was supposed to cut down on the corporate fraud with accounting. This all started because some companies such as, Enron and WorldCom. Enron was reporting inaccurate trading revenues by acting as a middle man in partnerships and selling back and forth these partnerships and crediting Enron for the profits (Britannica). The government stepped in and investigated their accounting practices and while the investigation was occurring, their accountants started destroying evidence (Britannica). WorldCom, through their accounting records improperly stated $3.8 billion in five quarters (cbsnews). WorldCom should have showed a net loss but WorldCom’s records showed otherwise. WorldCom’s accountant company was the same as the Enron scandal and they claimed that they “complied with professional and Securities and Exchange Commission standards” with WorldCom. In both companies, the result of their wrongdoing made their stocks completely crash and their top executives in trouble with the law. The Sarbanes-Oxley Act makes companies create an oversight board or in case of the company not making one, by law, the board of directors is the board. The board is responsible to oversee that the financial records of the company is incompliance with the

The Sarbanes-Oxley Act of 2002 made substantial reforms in the regulation system for public accounting firms that audit public companies. It contains requirements strengthening penalties for corporate fraud. It also restricts the types of consulting

The Sarbanes-Oxley Act of 2002 (SOX) was enacted into law in 2002 in the wake of corporation financial reporting scandals involving large publicly held companies. SOX instituted new strict financial regulations with the intent of improving accounting practices and protecting investors from corporate misconduct. SOX requires corporate executives to vouch for the accuracy of financial statements, and to institute and monitor effective internal controls over financial reporting. The cost of implementing an effective internal control structure are onerous, and SOX inflicts opportunity costs upon an enterprise as executives have