Sarbanes-Oxley Act of 2002
The accounting profession was entangled in the accounting and business scandals whirlwind that rocked the American economy in 2002. To recover investor confidence in financial data, the Sarbanes-Oxley Act designed a new Oversight Board for public Company accounting with the power to set requirements for auditors of public organizations, thus bringing to an end a century of export control of audit. We determine that this reform results in an important loss of the professional position of auditors, which also affects other categories in the wider accounting career.
Significance of the Act
Between 2001 and 2002, a sequence of accounting frauds was discovered at major organizations. Consequently, the bubble burst sending investor confidence and stock prices are plummeting. The part of auditors in these frauds led to a deepening issue with the potency of professional self-regulation. High-profile business problems translating into a media fixation of Enron questioned the potency of the profession's self-regulatory process and the potency of the audit to maintain the public trust in the capital marketplaces. Legislation to deal with the disadvantages in financial reporting was advancing in the legislature, and the unexpected exposure and failure of WorldCom assured instant congressional action. The then U.S. president, Bush endorsed into law the Sarbanes-Oxley Act of 2002. It has been among the significant legislation affecting the accounting career since 1933 (Warren, 2011).
The Sarbanes-Oxley Act confiscated the capability of auditors to understand their part in society. In fact, when the PCAOB implemented the professional and auditing requirements that had been designed for many years by the AICPA, and that choice was accepted by the SEC,...
Sarbanes-Oxley Act of 2002 administration as also a majority of other western administration witnessed the collapse of corporate giants like Enron & Worldcom in the aftermath of noticeably fraudulent executive actions of these companies. This led to shareholders losing confidence and stringent laws was felt necessary in the form of new legislation to avoid repetition of Enron and Worldcom like incidents. The then President George W. Bush entrusted Senator Paul
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