While the Sarbanes-Oxley Act only applies to public businesses, the requirements of it should be applied to all types of businesses, even universities. This paper will provide a brief history of the law and discuss some of the ethical components and social implications on corporations.
This will help learners understand how the SOX Act can be used to solve problem situations in the accounting industry.The act was created to regulate financial practices and corporate governance. It became apparent that a new set of regulations needed to be passed, with more up-to-date policies regarding electronic reporting. The act also requires for-profit corporations in the country to increase their external controls through enhancing the duties and responsibilities of the audit committee. In protecting the shareholders and the general public the SOX Act is intended to improve the transparency of the financial reporting. All companies, according to SOX, must provide a year-end report about the internal controls they have in place and the effectiveness of those internal controls. The goal of these guidelines and regulations is to ensure the accuracy of a business accounting reports and to also make sure that company assets are not misappropriated or misused by its employees. The primary purpose of SOX is to protect shareholders from errors or fraudulent reporting by the company they have invested in. This tracking system is typically done by a bookkeeper and must be reliable in order to be effective.
How could many previously successful companies suddenly go belly-up? The penalties were designed to be harsh to discourage deviance from the rules set forward in Sox, and to prevent another huge scandal like Enron.
The action has created a new company standard of responsibility in order to protect the valued stakeholders, as well as the public, from the deceitful practices of various organizations.
The Sarbanes Oxley Act in incentivized institutions to keep more accurate and attainable records of business. Under Section signing officer should be familiar with the report and are responsible for internal controls and have evaluated these internal controls within the previous ninety days and have reported on their findings.
President George W.
This Act requires all United States companies to follow internal control guidelines and standards. Flash forward into the future by 20 years. SOX was created to decrease corporate fraud.Since the Sarbanes-Oxley Act, there have been provisions that have directly affected auditors. It was created to protect the integrity of business and the interest of consumers and investors. The Enron and Worldcom scandals, for example, helped investor confidence in entities traded on the public markets weaken during and SOX also addressed the way, and changed the way, corporate boards deal with their financial auditors. Lander, The Act created new standards for public companies and accounting firms to abide by. I will divide the paper up into four sections: the history of the act, trace its implementation, discuss its impact on society, and analyze the efficiency of the act. For each task given companies find it necessary to designate one person in order to ensure the responsibility is easily tracked. Senator Paul Sarbanes and U. The scandals came to establish that some board members had failed to meet their responsibilities, also to not having adequate proficiency to understand complexities of business. The act was passed on in as a federal United States law. This regulation stimulated by the Enron bankruptcy brought much attention in organizations by advising them to consider their off-balance sheet particulars. Begin with a strong argument, then use a stronger one and end with the most persuasive argument for your final point. In the long run, the firm suffered from bad debts and massive payment settlements it had to pay.