Sarbanes-Oxley
Over the last 13 years, the issue of fraud in publically traded corporations has been increasingly brought to the forefront. This is in response to firms engaging in behavior that is unethical and borderline illegal. The result is that investors demanded drastic action to prevent the situation from becoming worse. In response, Congress enacted the Sarbanes-Oxley Act (i.e. SOX). This required firms to make added disclosures and it closed various loopholes corporations were taking advantage of. To fully understand the impact this is having on the regulatory environment requires focusing on the requirements imposes by SOX. Together, these elements will illustrate how it is designed to prevent fraud within publically traded corporations.
The Provisions of Sarbanes-Oxley
The Sarbanes-Oxley Act of 2002, is dealing with the relationship corporate officers have with the board of directors. In the past, this relationship was used as a way for high level executives to receive special benefits. The most notable include: loans from the company, flexibility in preparing financial statements and a close relationship with the independent auditors / analysts. These elements make it easier for them to have direct control over the company's assets for personal use. (Green, 2004)
For example, Enron is second largest corporate bankruptcy in U.S. history. What helped to perpetuate it was the fact that the CEO (i.e. Jeff Skilling) had a close relationship with the board of directors. This allowed him to have greater amounts of power and influence in setting the direction of the company. His strategy was to take advantage of deregulation that was occurring within numerous public utilities around the globe. This involved participating in the production, distribution, trading and operations of them of different commodities (i.e. natural gas, electricity and water). The problem is that many of the projects were not economically viable. This made them very risky, given the fact that a number of events must go as planned in order to be profitable. Otherwise, there is a possibility of them experiencing tremendous losses. This happened with a number of projects that Enron...
The investors got intoxicated by fraud happened to them because of greedy people. Thousands of employees left as the stock market went to the peak but most of them left their jobs due to low pay as well. (Kerry Hannon, July 6, 2005) bill was passed by the President Bush after the corporate fraud nearly just after three weeks on April 25, 2002. It referred to the Senate Banking
Sarbanes-Oxley Act (SOA) was put into law in 2002 following the revelations that Enron (and Enron's accountancy Arthur Anderson), WorldCom, and other corporations were using blatantly corrupt practices in accounting and causing huge losses for stakeholders in those firms. Moreover, the U.S. Congress could not simply stand by and allow companies to use unethical and illegal practices to scam huge sums of money for corporate executives while stripping the IRAs
Sarbanes-Oxley Act The objective of this study is to read the guide to the Sarbanes-Oxley Act and to: (1) Evaluate the effectiveness of regulations such as Sarbanes-Oxley Act over minimizing the corporate fraud and protecting investors make one suggestion for improvement; (2) Given the oversight of the accounting profession by the PCAOB as a result of the Sarbanes-Oxley Act, assess the impact on auditing firms and the public accounting professions; (3)
Sarbanes-Oxley Act Evaluating the effectiveness of the Sarbanes-Oxley Act The Public Company Accounting Reform (PCAR) and Investor Protection Act (IPA) was established in mid-2002 by the congress with the emergence of unceremonious scandals in accounting practice that resulted in firms going bankrupt and losing huge stocks in the stock market (Prentice & Bredeson, 2010). This act is what is referred to as Sarbanes-Oxley act of 2002. The act also led to the
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
Literature on the Sarbanes-Oxley Act of 2002 The field of specialized literary reviews on the Sarbanes-Oxley Act is a widely spread one presenting numerous issues form various standpoints. Reviewers' opinions vary based on their position towards the bill and their prior professional expertise on white-collar crimes. Among the mostly appreciated and close to reality works are: The Impact of Regulatory Information Disclosure on Information Security Investments, Competition and Social Welfare by
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