Taking A Look At The Sarbanes-Oxley Act

Submitted By wswar
Words: 565
Pages: 3
Open Document
The Sarbanes-Oxley Act was passed in July 2002, while the investor were losing their trust on the market and public-company. The major goal of SOX, in my opinion, was trying to restore fiduciary duty and investor confidence for whole market, after some huge fraud scandals, such as Enron and WorldCom. Basically, we can divide principal components of SOX into three parts: enhancing the audit independence and oversight of public company audits, strengthening audit committees and corporate governance, and enhancing transparency, executive accountability and investor protection (Ey 2012).
Firstly, SOX enhances the audit independence and oversight of public company audits. The Sarbanes-Oxley Act sets up several standards for restricting audit performance and non-audit services, and they also established the PCAOB for setting, enforcing audit standards. According to the PCAOB government website, "the PCAOB is a non-profit corporation established by Congress to oversee the audits of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, accurate and independent audit reports.” PCAOB, one of the most important influence made by the Sarbanes-Oxley Act, is the only authority for inspection, enforcement and setting audit standards authority. PCAOB’s major job is monitoring the audit of public companies, and oversee the external and internal auditing. Additionally, SOX prohibited audit firms to operate most audit non-audit services performed by the incumbent auditor, because SOX thought the personal relationship which built in the non-audit services may influence the audit services. This relationship may become a threat that will diminish auditor’s intent to practice deviations from the standard (DeFond 2005).
Secondly, SOX strengthens audit committees and corporate governance. Based on the SOX, “all listed companies should have audit committee and independent of management, which would be directly responsible for oversight of the external auditor. (Ey 2012)” They even required the limit times the audit committee should meet. This rule directly extended the responsibility of public company for external audit. External audit is not only the responsible for the auditor, the company also need prepare and do their own job for external audit. Additionally, SOX added more requirement for the internal control of financial reporting. Public company should have effectively internal control, and external auditor will offer an evaluation for company’s internal
Show More

Related Documents: Taking A Look At The Sarbanes-Oxley Act

The Sarbanes-Oxley Act Of 2002

The Sarbanes-Oxley Act of 2002 The Sarbanes-Oxley Act of 2002 On July 30, 2002, President Bush signed the Sarbanes-Oxley Act of 2002 (SOX) into law, stating the legislation would be “The most far reaching reforms of American business practices since the time of Franklin Delano Roosevelt,” (Process, 2012). The Act was designed to mandate many reforms in order to require greater corporate responsibility, disclosure, transparency, and to combat against accounting fraud. In response to several…

Words 2815 - Pages 12

Weeks 2 Sarbanes Act Essay

Acc 561 Richard Edwards Analysis of the Sarbanes-Oxley Act September 7, 2014 Analysis of the Sarbanes-Oxley Act The Sarbanes-Oxley Act of 2002 was written to prevent fraudulent reporting of financial statements which are used to make a company’s performance seem better than it actually is to its investors. The details of the act creates penalties and fines for the presentation of false information and holds the handlers of that information accountable such as the company’s auditing firms…

Words 1438 - Pages 6

Foreign Corrupt Practices Act Of 1977

and Toma (2012) revealed that the U. S. Congress has passed two laws including the Foreign Corrupt Practices Act “FCPA” of 1977 and Sarbanes-Oxley Act of 2002 laws to fight the white-collar crimes. Further, the Foreign Corrupt Practices Act (FCPA) of 1977 focuses on bribing and corruption. This Act came out as a result of the fact that the executives of Lockheed have corrupted the Japanese companies to get their business. Further, the U. S. Congress quickly passed the Sarbanes-Oxley Act “SOX” in…

Words 369 - Pages 2

Effectof Untheicaal Behivor Essay

Effect of Unethical Behavior Article Analysis ACC/291 October 22th 2012 Joe Kronewitter The Sarbanes-Oxley act was created in 202 to help restore the public confidence in the financial markets and integrity as well. There have been quite a few corporate disasters that included including Enron, Worldcom, Adelphia, and Tyco. All four corporate disasters had similar fraudulent behavior. The implementation of effective business ethics became essential and the new law required the publication…

Words 642 - Pages 3

The Sarbanes-Oxley Act

Sarbanes-Oxley Act (SOX Act) of 2002 Article Need for Establishment The Sarbanes-Oxley Act was passed as an answer to and in response to a large-scale occurrence of corporate scandals. Most notably were the doctored financial reports of large companies like Enron, Tyco, and WorldCom in which many questionable business transactions that resulted in massive stakeholder losses and shattered investor confidence ensued. The Sarbanes-Oxley Act Intent The acts primary intent is to protect businesses and…

Words 821 - Pages 4

The Sarbanes-Oxley Act: An Ethical Perspective

The Sarbanes-Oxley Act: An Ethical Perspective Presented By: • Karroll Candelaria-Bauer • Jorge Garcia • Corina Gonzales • Marisa Sanchez • Matthew Wylie November 22, 2014 Sarbanes-Oxley Act: An Ethical Perspective Contents Introduction.......................................................................................2 The Provisions....................................................................................5 The Value in Context .................................................…

Words 8824 - Pages 36

Sarbanes-Oxley Act Essay

Sarbanes-Oxley Act of 2002 James Gauck ACC/290 December 17, 2012 Susan Laymon Sarbanes-Oxley Act of 2002 On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002. The Act-which applies in general to publicly held companies and their audit firms-dramatically affects the accounting profession and impacts not just the largest accounting firms, but any CPA actively working as an auditor of, or for, a publicly traded company. The basic implications of the Act for accountants…

Words 482 - Pages 2

Sarbanes-Oxley Act Research Paper

Ashley Spargur Professor Ken Schallenkamp Business Ethics 29 November 2014 Sarbanes-Oxley Act “Just as character matters in people, it matters in organizations” – Justin Schultz What does Enron, Tyco, World Com, and Adelphia all have in common? Fraud, and the catalyst for the Act we have come to know as the Sarbanes-Oxley Act. Even though I was only ten when the Enron scandal began I remember hearing it on the news, my parents discussing it, and the media buzzing about it. Even though their scandal…

Words 1548 - Pages 7

Unit 1 Discussion Essay

Unit 1 Discussion Health Insurance Portability and Accountability Act (HIPPA) The HIPAA Privacy Rule stipulates federal securities for individual health reports held by included entities and their employees. HIPPA gives patients a collection of rights regarding their information. HIPAA concentrates on 3 areas of the health-care industry: administrative simplification, unique health identifiers, and privacy and security. While HIPAA is directed toward the health-care industry, IT puts these regulations…

Words 542 - Pages 3

Cox Research Paper

The Sarbanes-Oxley Act of 2002 and the PCAOB Michael Cox Liberty University Abstract As a result of massive accounting scandals in the United States between 2001 and 2002 involving notorious companies, such as Enron, Worldcom, Tyco, and various other recognized entities, President George W. Bush signed into legislation during 2002 the Sarbanes-Oxley Act of 2002. This historic piece of legislation has had a profound effect on the accounting profession. As a result of the act, the PCAOB was created…

Words 2490 - Pages 10