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Sarbanes-Oxley Act Was Implemented In Term Paper

If this policy was in place at the time of the Enron scandal, Anderson may not have had any incentive to lie on behalf of Enron. Another extremely important rule that would have had an impact upon Enron is the rotation rule. The lead and concurrent audit partners cannot stay on a particular public company for more than five years, they must continually rotate. Had this rule been in place, Arthur Anderson himself who sat twenty years on Enron would not have had the opportunity to conduct deceit and destroy documentation. The primary aspect of SOX in application to preventing scandals such as Enron is provide much more repercussions for corporate finance abuse and more importantly, for greater responsibility for all parties involved in audits. The audit committee of all public companies are now required to overview all audits that are being conducted. In addition, CEOs and CFOs of public companies are required...

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This holds them accountable and provides significant penalties for false certifications. These safeguards, if they were in place with Enron would have put much more reasonability and consequences upon the actions of the CEO and CFO, thus possibly deterring their actions. In general the criminal punishments associated with obstruction of justice and securities fraud. As a result, the deterrents in place may have well have deterred Enron, Anderson and all other parties involved to reconsider their actions.
The Role of Empirical Evidence in Evaluating the Wisdom of the Sarbanes-Oxley Act, 40 University of San Francisco Law Review 823-844 (2006) http://eprints.law.duke.edu/archive/00000840/" Public and Private Enforcement of the Securities Laws: Have Things Changed Since Enron?, 80 Notre Dame Law Review 893-907 (2005) (with Randall S. Thomas)

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SOX would have had a major impact upon Enron because it provides many filters in which to catch corporate finance disclosure and duplicity. The creation of a public company accounting oversight board was the first major step of SOX. This board is designed to preventing auditing abuses. The board registers, oversees, investigates and disciplines all accounting firms that auditing public companies. As a result, it provided a level of supervision on accounting firms that was not there at the outset. In addition auditing standards were established across the board which put much more accountability in the hand of auditors and held them accountable to be checked by a national level committee. One of the key reasons that the Enron scandal occurred is because the accounting firm, Arthur Anderson, earned more from Enron in consulting services than in auditing. Therefore they were willing to compromise their integrity in order to preserve their consulting business. The new policy prohibits auditors from "contemporaneously" providing companies with both auditing and specific types of consulting services. If this policy was in place at the time of the Enron scandal, Anderson may not have had any incentive to lie on behalf of Enron. Another extremely important rule that would have had an impact upon Enron is the rotation rule. The lead and concurrent audit partners cannot stay on a particular public company for more than five years, they must continually rotate. Had this rule been in place, Arthur Anderson himself who sat twenty years on Enron would not have had the opportunity to conduct deceit and destroy documentation.

The primary aspect of SOX in application to preventing scandals such as Enron is provide much more repercussions for corporate finance abuse and more importantly, for greater responsibility for all parties involved in audits. The audit committee of all public companies are now required to overview all audits that are being conducted. In addition, CEOs and CFOs of public companies are required to personally certify accuracy for their financial reports. This holds them accountable and provides significant penalties for false certifications. These safeguards, if they were in place with Enron would have put much more reasonability and consequences upon the actions of the CEO and CFO, thus possibly deterring their actions. In general the criminal punishments associated with obstruction of justice and securities fraud. As a result, the deterrents in place may have well have deterred Enron, Anderson and all other parties involved to reconsider their actions.

The Role of Empirical Evidence in Evaluating the Wisdom of the Sarbanes-Oxley Act, 40 University of San Francisco Law Review 823-844 (2006) http://eprints.law.duke.edu/archive/00000840/" Public and Private Enforcement of the Securities Laws: Have Things Changed Since Enron?, 80 Notre Dame Law Review 893-907 (2005) (with Randall S. Thomas)
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