The Sarbanes Oxley Act ( Sox )

The Sarbanes Oxley Act ( Sox )
Essay #1– Tax Advantages and Disadvantages of Sarbanes–Oxley
Eric Kitts
Liberty University Introduction
The Sarbanes–Oxley Act (SOX) of 2002 was implemented to deter fraudulent activities amongst
companies by monitoring and auditing financial activities as well as set up internal controls to aid in
the safeguard of company funds and investor's interest. SOX also regulates the non–audit tax
services (NATS) that can be performed by an auditing firm. SOX was passed by Congress in 2002 in
an attempt to address the unethical behaviors of corporate firms such as Enron, WorldCom,
Sunbeam, and others (Raabe, Whittenburg, Sanders, & Sawyers, 2015). Raabe et al. (2015)
continues explaining that SOX was created in response to the inadequacies ... Show more content on
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However, the application of SOX has brought on regulations that public companies must put in
place and follow to prohibit these unethical occurrences. One major advantage for associated with
SOX is that more thorough audits are being conducted by auditing firms. Audits being conducted
more thoroughly will provide accuracy and an increased reliability of financial data. This will affect
taxes in a positive way and provide firms with an advantage. Causholli, Chambers, and Payne
(2014) suggest that prior to the implementation of SOX in 2002, "an auditor's opportunity to sell
additional non–audit services in the subsequent year, coupled with the client's willingness to buy
services, intensified the economic bond between auditor and client, in turn reducing auditor
independence and the quality of financial reporting" (p.681). The regulation of auditor provided
non–audit tax services has increased the reliability of tax and financial reporting within companies.
Seetharaman, Sun, and Wang (2011) explain that "in a post–Sarbanes–Oxley environment, the
benefits of auditor–provided non–audit tax services (NATS) seem to manifest themselves in higher
quality tax–related financial statement management assertions" (p. 677).
Auditing firms are no longer able to focus primarily on selling additional services. Instead, they are
now concerned with providing excellent service to the client. This has resulted in additional tax and
financial reporting
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Sarbanes Oxley Outline
The Ineffectiveness of the Sarbanes Oxley Act
In Corporate Management and Accounting In the early 1990s, a young company named Enron was
quickly moving up Fortune magazine's chart of "America's Most Innovative Company." As the
corporate world began to herald Enron as the next global leader in business, a dark secret loomed on
the horizon of this great energy company. Aggressive entrepreneurs eager to push the company's
stock price higher and a series of fraudulent accounting procedures involving special purpose
entities were about to be exposed. In early 2002, the United States Justice Department announced its
intent to pursue a criminal investigation into the once mighty company, Enron. After the gross
negligence of accounting ... Show more content on Helpwriting.net ...
Passing of Sarbanes by Congress to limit corporate accounting violations. (Sarbanes Oxley Act of
2002)
2. The creation of the Public Company Accounting Oversight Board and its controversial creation. a.
The mandatory registration of public accounting firms who prepare audits for public companies. b.
The extensive rules given to accounting firms under §103 of Sarbanes Oxley and the complexity of
their application. c. How public accounting firms are unable to handle increased auditing and
accounting demands by public companies.
3. Increase in expenses for businesses to achieve compliance with Sarbanes standards. a. Inaccurate
calculations made by Congress minimizing the costs associated with Sarbanes compliance. (Feeney,
T., The Heritage Lectures; No. 995) b. Businesses struggle with the cost of accounting department
upgrades for internal audit procedures due to lack of funds. c. The slow destruction of the U.S.
economy where companies find more benefits of going public in overseas markets or selling to
private equity firms.
4. The controversy surrounding Sarbanes §404 and its application to corporate accounting. (In re
Buca Inc. Secs. Litig, 2006) a. The ambiguity Sarbanes §404 presents for corporate management
and the relationship of external auditors. (In re Cardinal Health, Inc. Sec. Litigs., 2006) b. The
inability for accounting firms to interpret and apply Sarbanes §404 clearly for publicly held
corporations.

Sarbanes-Oxley Act Essay
The Sarbanes–Oxley Act (SOX) was passed by Congress in 2002 as a response to large corporate
accounting fraud scandals that resulted from blatant abuse of self–regulation. SOX "is the most far–
reaching and significant new federal regulatory statute affecting accountants and governance since
the Securities Acts of 1933 and 1934" (Wegman, 2007). The main goal of SOX was to protect
investors from fraud by strengthening oversight and improving internal control. In the discussion
below are the advantages and disadvantages of SOX as well as an opinion regarding how successful,
or unsuccessful, the SOX regulations were for the prevention of fraud and protection of small
business. Advantages of SOX One of the advantages of SOX was the improvement on and
expansion of corporate disclosures, including but not limited to, audit committee independence, off–
balance assets and liabilities and any commitments or contingencies (Akhigbe & Martin, 2005).
Prior to SOX public companies could manipulate their financial statements to, among other things,
increase the value of their stock. The additional disclosure requirements resulted in greater
transparency of financial statements and shareholders would now have information deemed
necessary ... Show more content on Helpwriting.net ...
During testimony to the Small Business Committee it was said that the cost exceeded what Congress
ever intended and had outweighed the benefit expected to shareholders and management (Iliev,
2010). The growth of small business is a prominent national interest and an important part of the
economy but the regulations are not able to protect investors and simultaneously encourage their
growth (Castelluccio, 2005). Fortunately, there have been subsequent laws passed that reduce
standards as well as offer opportunities for exemption to certain regulations which offers some relief
but not

The Effect Of The Sarbanes-Oxley Act
After a prolonged length of corporate scandals involving big public businesses from 2000 to 2002,
the Sarbanes–Oxley Act changed into enacted in July 2002 to restore buyers' self–belief in markets
and near loopholes for public groups to defraud traders. The act had a profound effect on company
governance within the country. The Sarbanes–Oxley Act requires public groups to bolster audit
committees, carry out inner controls assessments, set personal liability of directors and officers for
accuracy of financial statements, and enhance disclosure. The Sarbanes–Oxley Act also establishes
stricter crook consequences for securities fraud and changes how public accounting companies
operate their corporations.
Both the management and the accountants

Sarbanes–Oxley Act was a game changer for corporations all across the United States. Prior to
Sarbanes–Oxley Act, big name companies such as Enron, Kmart and Tyco were more inclined to
have fraudulent activities happen internally. Having all these issues arise during the last decades,
Congress was anxious to act and create Sarbanes–Oxley Act with the intentions to protect investors
and have strict reforms to deter internal financial frauds from occurring again. Although, this reform
has had a great amount of success in achieving its goals, it also has some holes that were not well
though out, when it comes to the entirety of it. The main problem with Sarbanes–Oxley is the cost it
has on smaller companies, which shifted the power from the investors and into the auditors. (Prince,
2005) ... Show more content on Helpwriting.net ...
Section 404, places great emphasis on internal controls and it is apparent that in the last couple of
years this sections total costs have been going down severely. However, it is still high enough to
maintain that it deters smaller companies from having enough money left over to be more
innovative (Prince, 2005). As it was stated above the investors were the people who were supposed
to benefit the most, but instead due to these high rules and compliances, companies have to follow, it
is the auditors who gain the most. There are two ways to solve this problem; the first method is to
not have a one–size–fits–all approach when it comes to the different sizes in company, and
subsequently auditors understanding and focusing more on lower risk accounts and moving to the
Higher risk accounts (Basilo

Sarbanes-Oxley Act 2002
The Sarbanes–Oxley Act of 2002 (often shortened to SOX) is legislation passed by the U.S.
Congress to protect shareholders and the general public from accounting errors and fraudulent
practices in the enterprise, as well as improve the accuracy of corporate disclosures. The U.S.
Securities and Exchange Commission (SEC) administers the act, which sets deadlines for
compliance and publishes rules on requirements.
The Sarbanes–Oxley Act was enacted in response to a series of high–profile financial scandals that
occurred in the early 2000s at companies including Enron, WorldCom and Tyco that rattled investor
confidence. The act, drafted by U.S. Congressmen Paul Sarbanes and Michael Oxley, was aimed at
improving corporate governance and accountability. ... Show more content on Helpwriting.net ...
Chief legal counsel for companies of all sizes will follow the proceedings closely, watching the
jury's deliberations and gauging its reaction to the prosecution. (Longnecker, 2004).
Passed in the wake of last year's corporate accounting scandals, the Sarbanes–Oxley Act requires
public companies to disclose more financial information than in the past, and it holds corporate
directors and officers more accountable for the accuracy of disclosures than ever before. Sarbanes–
Oxley also requires companies' top officers to assess and certify the effectiveness of the internal
controls they use for financial reporting.
Some of the Sarbanes–Oxley requirements aren't entirely clear, and the Securities and Exchange
Commission, which implemented the law, hasn't been all that helpful. In comments on section 404,
the SEC ruled that beginning with a company's fiscal year ending on or after June 15, 2004, it must
issue four statements: one indicating management's responsibility for maintaining internal controls;
one identifying the framework used to evaluate internal controls; one saying the company's auditor
attests to management's assessment; and one assessing the effectiveness of internal–reporting

Analysis of the Sarbanes-Oxley Act
Analysis of the Sarbanes–Oxley Act
Abstract
The Sarbanes–Oxley Act (SOX) was enacted in July 30, 2002, by Congress to protect shareholders
and the general public from fraudulent corporate practices and accounting errors and to maintain
auditor independence. In protecting the shareholders and the general public the SOX Act is intended
to improve the transparency of the financial reporting. Financial reports are to be certified by the
Chief Executive Officer (CEO) and Chief Financial Officer (CFO) creating increased responsibility
and independence with auditing by independent audit firms. In discussing the SOX Act, we will
focus on how this act affects the CEOs; CFOs; outside independent audit firms; the advantages and
a ... Show more content on Helpwriting.net ...
A recent study by Xue Wang (Emory University) tackles how SOX has affected the compensation
and turnover rates of CFOs. They play a critical role in developing firms' financial reporting and
making voluntary disclosure decisions. Moreover, CFOs are ultimately responsible for the quality of
internal control systems. The study provides some important insights about the impact of SOX on
the executive labor market. It shows that requiring more disclosure of information about a firm's
internal controls provides some positive benefits with respect to corporate governance, in this case
making it easier for boards to monitor the activities of CFOs. In comparing and contrasting firms
with strong internal controls received an increase in salary, bonus, and total compensation in the
post–SOX time periods. In contrast, CFOs of corporations reporting a problem with their internal
controls incurred a significant reduction in their compensation packages. With respect to CFO
turnover, Wang did find that CFO turnover rates generally increased form the pre– to post–SOX
period.
Outside independent audit firms
The Sarbanes–Oxley Act (SOX) was enacted in July 30, 2002, by Congress to protect shareholders
and the general

Essay on The Sarbanes-Oxley Act
There are so many organizations today that are using the Sarbanes–Oxley (SOX) legislation that
helps to safeguard their company and their financial records. The Sarbanes–Oxley act began in 2002
and the purpose behind this act was to protect organizations, it had a major impact on accounting
and record keeping. Because of Enron, they passed this act for publicly–traded corporations to better
implement control to their enterprise data. "Named after Senator Paul Sarbanes and Representative
Michael Oxley, who also set a number of deadlines for compliance" (SOX Law ). "The Sarbanes–
Oxley Act is arranged into eleven titles, but the most important sections within these are often
considered to be 302, 401, 404, 409, 802 and 906" (SOX Law ). The ... Show more content on
Helpwriting.net ...
This is the type of service that IBM is offering to their customers, and being SOX compliant.
"Section 404 mandates that company provide an annual report on internal controls, attested to by an
external audit firm" (IBM). While IBM is offering these services there are other companies that are
doing the same service too.
Protiviti an independent global risk and internal audit advisory firm, surveys client attitudes about
the costs, and the benefits, of compliance with the law. Protiviti in many cases is helping to manage
document controls, to perform tests, and develop an option of the internal controls that the external
auditors rely on. According to this company they believe that "Companies with weak or non–
existent internal controls over financial reporting are more susceptible to fraud and those frauds will
take longer to uncover" (McKenna, 2011). They have reported that a lot of companies spend
between $100,000 and 1,000,000,000 on compliance activities; this depends on the size of the
company. About 50 percent of companies do most of their SOX work internally within the company.
Within the corporation, Protivite address the smaller companies in three areas where their internal
control compliance. Companies will find that they are behind in IT general controls, spreadsheet
controls, and segregation of duties. They are doing what they can to help in these areas.
To conclude, the Sarbanes–Oxley act

The Sarbanes-Oxley Act
After major corporate accounting scandals, especially from Enron and WorldCom, Congress enacted
the Sarbanes–Oxley Act of 2002. It is a United States federal law that set corporate governance over
U.S. Public Companies. The bill contains eleven sections which hold a public corporation's board of
directors' accountable, created criminal penalties for certain misconduct, and created regulations to
define how public corporations are to comply with the law. Even though it was enacted almost
fifteen years ago there is still debate and controversy. Even now there is talk about Congressional
Republicans aiming to loosen a provision of Sarbanes–Oxley, which was introduced in the Financial
Choice Act by Jeb Hensarling (R., Texas), the chairman of the ... Show more content on
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Many believe it was politics that got it pushed through, and that its intent was to lower risk taking
and competitiveness. Even after so many years it is still difficult to measure the legislations overall
net benefits. One worthy note to justify the legislations achievements despite its criticism is the fact
that the act itself and the institutions it created are still going on intact since its original enactment.
With the mandate to require public companies to obtain an independent auditor of their internal
control practices, many small companies felt the impact on the financial side, until it was ultimately
deferred for companies with market caps of less than $75 million and finally made permanent in the
Dodd–Frank Act. Eventually audit standards were also modified in 2007, which according to an
article from the Journal of Accountancy called "Changes in Accounting for Changes" by Jack O.
Hall, "reduced costs for many firms by 25 percent or more per year." Even with the act having high
initial costs, research suggests that it has proved beneficial. Many corporations have been able to use
the quality information from independent auditors to assess acquisitions more effectively, mangers
have improved on internal reporting procedures, and the internal control testing has become more
cost effective over

The Sarbanes–Oxley Act was passed in 2002 as a response to a wave of corporate accounting
scandals that damaged public trust in the controls of the US financial system. SOX therefore was
created in order to create the framework for better control over accounting information and better
accountability among members of senior management. Damianides (2006) notes that much of the
burden of providing these tighter controls has fallen to IT departments. The Act not only sets out
prescriptions for tighter internal controls, but effectively mandates that senior IT managers will need
to communicate those controls to their CFO and CEO, as well as to external auditors. In particular,
records must be maintained carefully, which implies that to safeguard the integrity of the
information, all of the firm's financial information needs to be digitized. Transactions also need to be
recorded in such a manner that they can be compiled quickly and accurately into GAAP financial
statements. In addition to adding the requirement for strong internal controls on the IT department
something that was optional before, SOX also will mean that the IT department is going to have a
higher degree of strategic integration with the rest of the firm. As a result, IT managers will need to
become more accustomed with working closely with both internal auditors and with senior
management. The days of IT as a function separate from other parts of the business are over under
SOX, especially where it concerns

The Importance Of Sarbanes Oxley Act
MEMO To: Professor of ACG 1001 Writing Project From: Calvin Robinson CC: Date: June 13,
2016 Re: The Importance of Sarbanes–Oxley Act After several scandals that involved such major
corporations as WorldCom, Enron and Arthur Anderson. President Bush signed the Sarbanes–Oxley
Act of 2002 on July 30, 2002 which created after Senator Paul Sarbanes and Representative Michael
Oxley. The act was created to regulate financial practices and corporate governance. It consists of 11
different sections or titles. It is aimed at protecting investors by providing accuracy and reliability of
corporate disclosures and to help restore confidence within the investors. " Sarbanes–Oxley
developed the Public Company Accounting Oversight Board, a private, nonprofit corporation, to
ensure that financial statements are audited according to independent standards".(Fass 2003) The
first main aspect of federal legislation was the Securities Act of 1933, which was derived from the
Market crash of 1929. In order to protect a company or a business it relies that each quarterly report
financial issues has to be authorized and confirmed by the executive officer or chief financial
officer. Therefore, companies are required to have an internal auditor that is certified by an external
auditor. The Sarbanes–Oxley Act or SOX affects not only the financial corporations, but also IT
departments that are in charge of storing electronic records for companies. The act states that the
records should not be

The Sarbanes Oxley Act Of 2002
Jamie Brown
Sarbanes–Oxley
BLA303
8/24/2014
Abstract The Sarbanes Oxley Act of 2002 was created to extinguish doubts on the financial system
that were introduced during the financial collapse of Enron, a resource trading company that was
brought to its need by corporate greed and corruption. Enron's downfall could have been avoidable
should there have been any transparency into the finances of the company for the shareholders. It
was for this fact that the Sarbanes Oxley Act introduced many new factors of protection for
transparency, separation of duties and tougher penalties for those who violated investor trust. All of
these facts will be reviewed and discussed to show their impacts on businesses still functioning
today.
Introduction
Most people remember the Enron scandal that surfaced in 2001 and took down the goliath company
within months. The corruption and greed that surfaced in the months after Enron went into
bankruptcy was astounding and has been studied over and over again as to how exactly it was
allowed to happen. Enron, combined with the bankruptcy of other giants such as Tyco and
WorldCom, all due to corporate corruption and greed lead to the creation of the Sarbanes–Oxley Act
of 2002. The Act was named after its primary creators, Senator Paul Sarbanes and Representative
Michael Oxley and was intended to "protect investors by improving the accuracy and reliability of
corporate disclosures made pursuant to the securities laws, and for other

The Sarbanes–Oxley Act of 2002 (SOX) was enacted to bring back public trust in markets. Building
trust requires ethics within organizations. Through codes of ethics, organizations are put in line to
conduct themselves in a manner that promotes public trust. Through defining a code of ethics,
organizations can follow, market becomes fair for investors to have confidence in the integrity of the
disclosures and financial reports given to them. The code of ethics include "the promotion of honest
and ethical conduct, requiring disclosure on the codes that apply to senior financial officers, and
including provisions to encourage whistle blowing" (A Business Ethics Perspective on Sarbanes
Oxley and the Organizational Sentencing Guidelines). The Sarbanes–Oxley Act was signed into law
from public demand for a reform. Even though there are some criticism about it, the act still stands
to prevent and punish corporate fraud and malpractice.
The Sarbanes–Oxley Act was security law that was birthed from corporate and accounting scandals.
The act's name was drafted from Senator Paul Sarbanes and Congressman Michael G. Oxley. Oxley
is a congressman who introduced his Corporate and Auditing Accountability and Responsibility Act
to the House of Representatives. Sarbanes was a senator who proposed his Public Company
Accounting Reform and Investor Protection act to the senate in 2002. After the public kept on
demanding for a reform, both of the proposed acts passed and President George W. Bush

Introduction
In this paper, I will be discussing the Sarbanes–Oxley Act of 2002. 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. The act itself is made of of 11 sections or "titles". Each title is a
major key point in the act which also goes into more depth by containing several sections within it.
This paper will me going over all of the sections covered in the act, but will focus on the major
sections that have proven this act to be efficient in its purpose and the negatives as well. This act has
been quite controversial regarding its strengths and weaknesses, but it contains some key values that
should be used as a ... Show more content on Helpwriting.net ...
Despite major loses, the companies grew because Enron essentially believed that "saying the right
words, turning around three times and throwing salt over your shoulder could somehow transform
something without economic substance into something with economic substance. (SEC Historical
Society)" Due to this misleading and fraudulent act, shareholders lost billions of dollars when the
companies crashed and the share prices went down with it (Citeseer). After uncovering several
scandals from companies such as Enron, Worldcom, and Tyco, people found it difficult to trust and
invest in companies again. As a result to this unforeseen and unethical scandal, the Sarbanes–Oxley
Act was passed on July 25, 2002. The House approved this act with a vote of "423 in favor, 3
opposed, and 8 abstained", showing a unanimous favor in the necessity and practicality of the act.
The Sarbanes–Oxley Act was also known as the "Public Company Accounting Reform and Investor
Protection Act" (in the Senate) and the "Corporate and Auditing
Accountability and Responsibility Act" (in the House), or simply SOX (Citeseer). Its purpose is to
ensure the honestly of the company's financial statements and to also make shareholders feel safe
with where they are spending their money. In order to keep businesses running and the society's best
interests, this act is necessary. It is

Sarbanes-Oxley Act Summary
The Sarbanes–Oxley Act was conceived by Senator Paul Sarbanes and Congressman Michael Oxley
and signed into legislation by George W. Bush in 2002. The 11 titled Act became necessary when
investors lost their confidence in days following the Enron, Arthur Anderson, and WorldCom
fiascos. The purpose of the law is to provide board members, executives, auditors, attorneys, and
directors with specific written duties and penalties for noncompliance and "to protect investors by
improving the accuracy and reliability of corporate disclosures made pursuant to the securities
laws," as stated by the Act. The SOX has become known to many as the greatest security law since
the Security Exchange Commission was formed in 1934.
Title I consist of nine sections ... Show more content on Helpwriting.net ...
This title consists of 9 sections that instruct in the behavior of auditing firms and establish guidelines
for external auditor independence. It also sets restrictions for clients outside of auditing boundaries
and requirements for audit partner rotation.
Title III is Corporate Responsibilities. These eight sections state the financial and accounting
responsibilities of public companies. They also issue that senior executives are held responsible for
the completeness and accuracy for financial documents. Requirements for audit committees and
limits and penalties for corporate officers are also included in the title.
Nine sections of Enhanced Financial Disclosures make up title IV. These sections discuss the
requirements for stock transactions, off–balance sheet transactions, enhanced reporting, and
relationships with "unconsolidated entities. It requires audits and reports on all financial records and
also sets internal control standards in relation to completeness and correctness of those documents.
Title V consist of a section titled Analyst Conflicts of Interest. This title's purpose is to restore
investor's confidence. This is done by setting rules and guidelines for the National Securities
Exchanges and security

Sarbanes-Oxley Act Analysis
Introduction According to HBS Working Knowledge (2014), since the signing of Sarbanes–Oxley
Act into law by George W Bush in 2002 the business environment in the United States changed. The
act brought transformation in public business in the perspectives of auditing and accounting
(Zameeruddin, 2003). The act majorly aimed at deterring as well as punishing corporate fraud and
general corruption by recommending strict penalties for perpetrators of these vises. Additionally, the
act was meant to protect the plight and interest of the workforce and the general shareholder
fraternity especially by protecting the whistleblowers of such offenses as the fraud. Further,
according to Zameeruddin (2003), the act improved transparency and quality of financial reporting
by emphasizing in independent accounting and auditing function in the public companies. Indeed,
the act enhanced its influence by providing for the adoption of a strict code of ethics in both
business ethics and corporate social responsibility. The designers of the act had the intent of
protecting the public image of corporate business by eliminating the notion of ... Show more content
on Helpwriting.net ...
The Costs and Benefits of Sarbanes–Oxley. Forbes. Retrieved on 1st December, 2015 from
http://www.forbes.com/sites/hbsworkingknowledge/2014/03/10/the–costs–and–benefits– of–
sarbanes–oxley/
Jahmani Y. & Dowling W., (2008). The Impact of Sarbanes–Oxley Act. Journal of Business &
Economics Research. Volume 6, Number 10, Pg. 57–66.
The guest (2006). Exploring the Impact of Sarbanes–Oxley. Thomsanet.com. retrieved on 1st
December 2015 from
http://news.thomasnet.com/imt/2006/11/21/exploring_the_impact_of_sarbanes–
oxley_oil_and_gas_financial_journal_contributed
Zameeruddin M., (2003). The Sarbanes–Oxley Act of 2002: An Overview, Analysis, and Caveats. A
Journal of Applied Topics in Business and Economics. Retrieved on 1st December 2015 from

On July 30, 2002, the Sarbanes–Oxley Act of 2002 was signed into law by the acting President
George W. Bush. The overall purpose of the Act was "to protect investors by improving the accuracy
and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes."
(SEC, 2013) This Act mandated multiple amendments to improve corporate responsibility, enhance
financial disclosures, and combat corporate and accounting fraudulent practices. One requirement of
the Act involves a management's report on internal controls over financial reporting to be included
in the annual financial reports of a company. On July 30, 2014, the Securities and Exchange
Commission (SEC) announced that CEO Marc Sherman and former CFO Edward L. Cummings of a
computer equipment company named QSGI, Inc. are being charged with misrepresenting the state of
its internal controls over financial reporting to external auditors and the investing public. Inadequate
internal control within the company can be extremely detrimental because investors and lenders rely
heavily on financial reports to make decisions. The incorrect records of QSGI enabled the company
to maximize loans from their top creditor. This report will show how QSGI's lack of internal
controls hindered their ability to generate revenue and maintain one of the company's operation
centers. So what are internal controls? And why are they so important? Internal controls describe the
policies, plans, and procedures

The Sarbanes Oxley Act Controversy
The Sarbanes–Oxley Act arose as a result of several corporate accounting scandals that became
public in late 2001 and early 2002. These scandals involved many publicly traded companies such
as Enron, which "boosted profits and hid debts totaling over $1 billion by improperly using off–the–
books partnerships"; WorldCom, which "overstated its cash flow by booking $3.8 billion in
operating expenses as capital expenses and gave founder Bernard Ebbers $400 million in off–the–
books loans"; and Xerox, which "falsified financial results for five years, boosting income by $1.5
billion", among a long list of others (Patsuris, 2002). In the book Revolutionary Wealth, Alvin and
Heidi Toffler (2006) explain that "slowly changing regulatory and ... Show more content on
Helpwriting.net ...
Regulation and Enforcement The Sarbanes–Oxley Act consists of 11 titles that set significant
requirements and consequences for non–compliance in terms of transparency of financial reporting
and accountability of leadership for publicly held companies. The Act established the Public
Company Accounting Oversight Board (PCAOB), which is an independent, nongovernmental and
non–profit organization created to oversee the audits of public companies. The Act also set
requirements for the audit committee, the CEO and CFO in regards to certifying financial
statements, prohibits loans to executive officers, require real–time disclosure of information,
changed the deadline for insiders to report trading in company 's securities to within two business
days of the transaction, provides for the protection of whistleblowers, and imposes sanctions and
penalties on violators of the provisions of the Act ("Corporate scandals, the Sarbanes–Oxley Act of
2002 and equity prices," 2007, p. 83). All of these provisions are used to help improve accuracy and
reliability of corporate disclosures by ensuring transparency, neutrality, and accountability in
reporting financials, in order to protect investors. The Sarbanes–Oxley Act has many

When revisiting some history where scandals have taken place such as Enron or WorldCom, it
became necessary for stronger controls to be put in place and have all people involved held
accountable for their actions. It is for this reason that Sarbanes–Oxley Act is in place. It has not
stopped fraud from occurring; however, it does create a deterrent. In reading about the Societe
Generale fiasco poor IT security is the focal point in this fraud. Stronger security controls will be the
only way fraud of this magnitude will not take place again. Three key things need to take place
internal controls, strengthen financial reporting, and corporate governance.. For protection of the
bank, there needs to be more than one sign on/log in into a system

The Sarbanes Oxley Act ( Fraud )
Fraudulent activities and embezzlement are more prevalent in organizations than most people think.
Because of the multitude of previous scandals, the Sarbanes–Oxley Act has required all publicly
traded U.S. companies to have internal auditing and internal controls to check for fraudulent activity
and embezzlement. While the Sarbanes–Oxley Act only applies to public businesses, the
requirements of it should be applied to all types of businesses, even universities. In the Case of the
City University of New York, having internal controls and auditing would have halted the
embezzlement occurring there.
Several employees are under investigation, including former senior finance official, Carmine
Marino. He is accused of siphoning about ... Show more content on Helpwriting.net ...
As the discoverer, David W. Chen is qualified to report on the updates of the case and present facts
and opinions. Chen's original findings are summarized in his article "Lapses by CUNY Officials
Made System 'Ripe for Abuse, ' Report Says" more clearly states his purpose for writing. Chen
hopes to halt the siphoning of money that could be best used for students in need or campus
projects. His previous experience as an investigative journalist allows him to only discuss facts and
not wrongfully infer things regarding the investigation. He largely values his journalistic reputation
and will not allow it to be fractured by incorrect statements. Both articles largely present facts about
each case (Marino and Coico) and does not make inferences about the reasoning behind the
embezzlement or connections. Instead, he restates court documents and enables the understanding
for a range of ages. This is one of the major strengths of his argument. He does not even insert any
opinions of wrongdoing. His lack of judgement keeps his piece unbiased and strong. His use of
quotations from various New York personnel adds personality and personalizes the piece. The
quotes also allow readers to have an inside look to the scandal. Both articles state that "shoddy
oversight and ineffective management at the City University of New York have created a system
'ripe for abuse'" that assisted in the siphoning of money (Chen, 2016). The management there should
have utilized

In this paper, we will be discussing how Sarbanes Oxley has affected the American business and if it
has accomplished its goals. The goal of the Sarbanes–Oxley Act (SOX) is to convey confidence in
the stock exchange, but it does not defer all immoral activities that take place on the stock exchange.
People no matter the law, are responsible for the quality of their work and are accountable for the
integrity of themselves and their company. Their own ethical values can take precedence over those
set by Sarbanes–Oxley. Not all values are equal in quality, and a person may go above the rules
delegated by Sarbanes–Oxley, however, there is another side. Sarbanes–Oxley has created a fear
among business practitioners that this new set of standards ... Show more content on Helpwriting.net
...
Congress enacted the Sarbanes–Oxley (SOX) Act of 2002 to restore investor confidence by
requiring public companies to strengthen corporate governance through several mechanisms,
including enhanced disclosure on Internal Control Over Financial Reporting (ICFR). As claimed by
regulators, the disclosures on the effectiveness of ICFR are aimed at improving the quality of
financial reporting, which would, in turn, reduce the information asymmetry for investors in U.S.
capital markets" (Donaldson). Sarbanes– Oxley named after its creators, Senator Paul Sarbanes, D–
Md and Congressman Michael Oxley, R–Ohio. Enacted in 2002 with the purpose to crack down on
corporate fraud. The implementation of Sarbanes–Oxley led to the creation of the Public Company
Accounting Oversight Board (PCAOB) to oversee the accounting industry. It was created to
eliminate corporate fraud, and it put in place a ban on company loans to executives while also giving
job protection to whistleblowers. Before SOX was put into place the accounts were a self–regulated
profession, such as medical professionals and lawyers. This is what led to the fraudulent actions of
major institutions, people can be greedy, and they need checks and balances to ensure the fidelity of
the firm. There are criminal enhanced penalties for corporate fraud and related misdeeds, this brings
justice to the sector as well as working as a deterrent for additional immoral

The Significance of the Sarbanes–Oxley Act of 2002 I. The audit profession before 2002 The audit
profession is a relative new comer to the accounting world. The Industrial Revolution, with the
growing business sector, was the spark that resulted in auditing techniques being sought out and
utilized. Initially, audit techniques and methods were adopted by companies to control costs and
detect fraud, which is more closely aligned with internal auditing. However, the need for mandatory
oversight of public companies was recognized after the great stock market crash of 1929 (Byrnes, et
al., 2012). This brought about the Securities and Exchange Act of 1934 creating the Securities and
Exchange Commission (SEC). At that point, the SEC was tasked with ... Show more content on
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Should the increased audit fees charged to clients be the basis for the increased costs calculation?
Another area that could be considered a loss is the loss of non–audit or consulting fees to the public
accounting firms. Further, are the indirect costs, such as the consideration of lost opportunities that
are attributable to the Sarbanes–Oxley Act of 2002 (Jahmani, Yousef; Dowling, William A., 2008).
Another cost to comply with Sarbanes–Oxley Act of 2002, was the PCAOB inspections. Public
accounting firms put great effort and much money into preparing for a PCAOB inspection due to
how detailed the inspections could be. The initial increases in costs for compliance with the
Sarbanes–Oxley Act of 2002 have many ranges depending on the source and inputs. During 2005,
based on a sample of the Fortune 1000 companies, there was an average increase in the audit fees of
$2.3 million (Jahmani, Yousef; Dowling, William A., 2008). The public accounting firms suffered
greatly as a result of the Sarbanes–Oxley Act of 2002 compliance stipulations. As of 2008, the
estimate by the SEC was that compliance cost $2.3 million per year in direct costs related to
compliance for public accounting firms

Sarbanes Oxley Memo
Ancher Public Trading
TO: Board of Directors
FROM: Learning Team A consultants
DATE: August 22, 2005
SUBJECT: Sarbanes–Oxley recommendations
As consultants for Ancher Public Trading (APT), Learning Team A would like to discuss the
implications of the Sarbanes–Oxley (SOX) legislation. This memorandum provides a brief history
of SOX¡¦s creation, explains the relationship amongst the FASB, SEC and PCAOB, describes the
pros and cons of SOX, assesses the impacts of SOX, and lists ethical considerations of SOX.
History of SOX – the Sarbanes–Oxley Act of 2002 is legislation in response to the high profile
financial scandals, such as seen with Enron and WorldCom. The purpose of this act is to protect
shareholders and the general ... Show more content on Helpwriting.net ...
C.) Impact of SOX ¡V The act has immediate and profound implications for the behavior and
responsibilities of external auditors, management and the audit committee. Plus, even though
nothing is explicitly required of internal auditors by SOX, the legislation will change their role
within the firm. ¡§The act can be seen as an attempt to change the environment in which contracts
are written and private behavior occurs.¡¨ (Linsley, 2003). The following three points of SOX are
examples of the changes:
1) Ensure that the audit committee and the auditors are more independent.
2) Increase the consequences to the audit committee and the auditors if they submit incorrect
reports.
3) Make management formally recognize and accept responsibility not only for the financials, but
also for the internal control system.
"People have said these things are starting to filter down to smaller, non–public companies, Banks
are requiring different standards for corporate governance which has increased as a direct result of
Sarbanes–Oxley. People have started talking about spending more for internal controls, software,
having to hire more auditors and higher D&O [directors and officers] insurance." (Leport 2005)
Many improvements in financial transparency of companies are a direct result of the implementation
of SOX. According to R. Kulzick of St. Thomas

Internal controls are measures put into place that allow for more accurate and deliberate
representation of a company's financial data. Internal controls also serve to protect a company's
assets from theft, fraud or misuse. With internal controls in place it becomes more visible to
recognize if someone is stealing or misusing funds in any way. Internal controls also help to zoom in
on errors or unintentional mistakes. When these errors are picked up on early it eliminates future
problems for the company and its investors down the road. The Sarbanes Oxley Act of 2002 is what
enforces such internal controls of companies. This Act requires all United States companies to
follow internal control guidelines and standards. Many argue ... Show more content on
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Another principle is to have a separation between the physical handling of the assets and the
recording of it. This takes away the temptation for personal gain and lessens the chance of misuse.
Segregation of duties and functions is another safeguard companies can utilize to promote internal
controls. Having one person responsible for multiple tasks often leads to mistakes and causes more
confusion when trying to catch discrepancies. Independent internal verification is a useful internal
control. An example would be having an outside auditor check your books. Another principle
involves documenting procedures. The more documentation a company has the better equipped they
are for keeping solid internal controls in place. The final principle involves other controls such as
bonding employees through insurance policies, rotating duties often and ensuring thorough
background checks on employees prior to employment (Weygant, 2008). These additional checks
and balances are critical because they not only lay the foundations for ensuring a company's internal
controls are working as designed, but they also help to maintain the momentum of such controls. As
mentioned adherence to the SOX laws are not only required but they are necessary to keep a
business at its top peak. Once a company has to report an infringement on its' internal controls stock
prices will surely be impacted because investors become worried about misuse of funds. Sometimes
this admission of a

The Ethics Of The Sarbanes Oxley Act
In the past, many corporate executive have committed various forms scandals in their organizations.
Such fraudulent arts are unethical and immoral behavior. This led the US government to form
legislation in order to control fraudulent activities; mostly performed by senior officers in the
organization. In view of this, this paper will address the following: historical summary on SOX
enactment, the key ethical components of SOX, social responsibility implications regarding
mandatory publication of corporate ethics, whether the criticisms of SOX implication presents an
unfair burden on smaller organizations and suggestions on the improvement of SOX legislation.
Brief Historical Summary on SOX Enactment The Sarbanes–Oxley Act was introduced by Senator
Paul Sarbanes, a Democrat from Maryland and Congressman Michael Oxley, a Republican from
Ohio. President George W. Bush signed the bill into law in July 30, 2002. SOX enactment is an act
that was formulated as a result of corporate scandals from Enron, WorldCom, Adelphia, and Tyco.
However, Congress succumbed to pressure from the public for the government to take action about
the unethical behavior of company executives of publicly –traded companies. Thus, the Sarbanes–
Oxley (SOX) was to restore the integrity and public confidence in financial markets. During these
scandals, there were flagrant disregard to Generally Accepted Accounting Practices (GAAP). For
example, according to Washington Post (2005), WorldCom

Most word references characterize fraud as a bogus representation of true data. Whether that false
data is given by expressing false words, deluding claims, or by concealing or disguising uncovered
data, it is viewed as fraudulent because of the beguiling nature. In spite of the fact that it is deceptive
to give false data, people even in real companies will attempt to cover their misfortunes by reporting
false data. Taking after many years of monetary frauds and outrages including executives and
officers at a portion of the biggest organizations in the United States, Congress established the
Sarbanes–Oxley Act of 2002 (Cheeseman, 2013). Congress ordered the Sarbanes–Oxley Act of 2002
(SOX Act) to shield customers from the fraudulent exercises of significant partnerships. This paper
will give a brief history of the SOX Act, portray how it will shield general society from fraud inside
of partnerships, and give a presumption to the viability of the capacity of the demonstration to shield
purchasers from future frauds.
History of the SOX Act
Congress established the Sarbanes–Oxley Act of 2002, which is otherwise called the Public
Company Accounting Reform and Investor Protection Act, in the beginning of corporate and
accounting scandals that prompted liquidations, serious stock misfortunes, and a loss of trust in
stocks (Batten, 2010). The demonstration forces new obligations on corporate administration and
criminal authorizes on those supervisors who spurn the law, and it

THE LAW AND ITS HISTORY
What is The Sarbanes–Oxley Act? "With more than half of all American households invested in U.S.
public companies, the discoveries of financial reporting and auditing improprieties at Enron and
numerous other public companies beginning five years ago swelled in 2002 to a national crisis in
confidence in the integrity and reliability of public companies' financial statements and of external
audits." This act of 2002 is a legislation passed by the U.S. Congress to guard shareholders and the
general public against accounting errors and fraudulent practices in the enterprise, as well as
improve the accuracy of corporate disclosures. SOX defines individual accountability and requires
employees to construct an investigation of a business or person before signing a ... Show more
content on Helpwriting.net ...
Prior to the scandals, in addition to the unforeseen growth in household participation in the financial
markets, there was a growing interest in equity markets globally. Then, of course, the Enron and
other scandals revealed accounting failures by public companies and tainted the auditing profession
– which investors understandably had thought was acting as their watchdog in attesting to the
accuracy of the financial reports.
Following the failure of Enron in December 2001, in the wake of accounting scandals at major
corporations Adelphia, Peregrine Systems and others, Congress proposed legislation to reform the
governance of public companies to make boards of directors, CEOs and chief CFOs accountable for
corporate misconduct, according to Wikipedia. Sarbanes–Oxley makes employees at public
companies individually responsible for providing true and accurate information about companies'
financial statuses and practicing due diligence to secure proprietary information on investors,
customers, and

The Sarbanes-Oxley Act (SOX)
"Laws and regulations are established by governments to set minimum standards for responsible
behavior – society's codification of what is right and wrong" and to satisfy stakeholder's concerns
regarding companies' abilities to act in an ethical fashion at all times (Ferrell, Fraedrich, & Ferrell,
2013, p. 95). The Sarbanes–Oxley Act (SOX) was created following accounting fraud scandals of
several companies, including the Enron Corporation and Worldcom (Ferrell et al, 2015). The Act
was established to protect stakeholders and the public from accounting fraud. It has done a fair job
of deterring fraudulent reporting (Langevoort, 2007); however, I do not think regulating legislation
of any kind can completely prevent future ethical misconduct.

The Sarbanes-Oxley Act Of 2002
Some can say that the Sarbanes–Oxley Act of 2002 is working while some say that there still ways
to get around to committing corporate fraud. Washington wants to crack down on corporate fraud so
they came up with the Sarbanes–Oxley Act in 2002 that was designed to protect the interest of
investors. "The Sarbanes–Oxley Act established oversight of public corporate governance and
financial reporting obligations and redesigned accountability and ethics standards..." (Ferrell, O.,
Hirt, G., & Ferrell, L., 2009). The act was an important stepping–stone in the right direction
especially when responding to the financial scandals of Enron and WorldCom. Those scandals shook
customer's faith and confidence in corporate management of private organizations.

2002 Sarbanes-Oxley Act
Introduction
The 2002 Sarbanes–Oxley Act was implemented for the main purpose of protecting investors
through enhancing and promoting a real sense of transparency, precision and accountability when it
comes to the governance of corporate entities and this was to ensure that the divulgences employed
by the corporates are in pursuant to the ordinances of the sureties of the investors and the act also
had other functions as well. In brief, the Act was enactment in 2002 was mainly that it helps in
restoration of public confidence and integrity to the financial markets as events witnessed by
corporates going under with examples like Tyco, Enron, Adelphia and Worldcom (Orin, 2008). It
became very crucial for corporates to engage in effective corporate ... Show more content on
Helpwriting.net ...
The requisites in the Code of Ethics represented in the Sarbanes–Oxley Enactment have formed a
foundation in the world of business because business administrators and stakeholders are now
mandated to abide by the guidelines in the Act but they still need to be improved. When tackling the
issue of social responsibility of a corporate it is of utmost significance that transparency be a key
contributor, while ethics is considered by most in business as an oxymoron. People that lack moral
standards will more often than not look for loo–holes in this relations due to their evil behaviors,
however business principles and moral publication should be ensured so that such behaviors are
dealt with in line with the law. "There has been a number of scandals reported in relation with
accounting fraud and bad corporate governance as this are termed the biggest reasons why
businesses are failing as high–profile organizations continue to subside. Investor confidence levels
dropping in relation to financial capital markets due to investors incurring losses and correction
mechanisms of the market that were in place were inadequate thus forced the enactment of the SOX
Act by Congress (Jain,

ABTRACT There is relatively little evidence on impact of internal control on mergers and
acquisitions (M&A). This paper examine the relationship between internal control quality and M&A
performance. Specially, this paper takes a look whether or not internal control impact differently on
the performance of three types of M&A: horizontal mergers, vertical mergers and conglomerate
mergers. The Sarbanes–Oxley Act of 2002 (SOX), also known as the Public Company Accounting
Reform and Investor Protection Act and Corporate and Auditing Accountability and Responsibility
Act, is a United States federal law that was pass setting forth a requirement that a large majority of
publically traded firms had to periodically disclose information regarding their internal control
environments. Prior studies have shown that SOX internal control disclosures should be relevant to
M&A transactions. Weakness in internal control quality at the acquiring firm is likely to influence
M&A performance through a pre–merger decision or post–merger effect. I suspect that weak
internal control at an acquiring firm will ultimately lead to lower performance levels after the M&A.
Weak internal controls will lead management to acquire firms through less accurate internal reports
and forecasts. Once the M&A transaction is made, weak internal controls could impair
management's judgement and ability to effectively incorporate the target to capture anticipated
synergies. I will be using a content analysis to construct

Sarbanes Oxley
Financial scandals have impacted many individuals such as public companies and accounting firms.
Sarbanes Oxley has made many changes to many companies. The major financial scandals have
impacted many investors and required more regulations to avert this problems. Sarbanes Oxley has
tried to increase ethics in the upper management in many public companies. The upper management
has tried to improve on social responsibility and increase the public view. There are many critics to
Sarbanes Oxley and many different suggestions on improvements.
History of Sarbanes–Oxley Act
Scandals of many forms shape regulations in many aspects. The Sarbanes Oxley Act was a new
regulation that was initiated because of financial scandals. Tyco, ... Show more content on
Helpwriting.net ...
Social Responsibilities
Corporate social responsibility is an organizations' impact on society that goes beyond what is
ethical. Being socially responsibility, an individual in upper management must realize how the
actions might be able to influence the rest of the environment. If a company is socially responsible
the company is honest, trustworthy, and display integrity while dealing with others and provides the
attention to the stakeholders, build a community by searching for goals that are compatible with and
respect individuals and accomplish silent triumphs.
Some chief executive officers and chief financial officers had established policies in order to
determine the corporate social responsibility by affecting the local community. Some individuals
believe the corporate social responsibility can improve profits because it can promote respect for the
company in the marketplace resulting in higher sales. A company can have corporate social
responsibility in many manners such as treatment of employees, local community and increase
ethical behavior within the company. If the upper management provides ethical behavior and is
demonstrating to the employees and consumers it is a corporate social responsibility that is the most
important.
By respecting the Sarbanes–Oxley Act, the managers show the employees and the local community

The Sarbanes-Oxley Act Summary
The Sarbanes–Oxley Act (SOX) of 2002, aims to combat fraud, improve the reliability of financial
reporting and restores investor confidence. Section 404 of Sarbanes–Oxley emphasize the
management's responsibility in maintaining a sound internal–control structure of financial reporting
and assessing its own effectiveness. While the auditors' responsibility is to attest to the soundness of
management's assessment and to report on the state of the overall financial control system. Although
it has been a question by most executives, however, some approached the new law with gratitude.
As SOX went into effect, more executives had realized the need for internal reforms; they were
startled by the weaknesses and gaps of their internal control that compliance reviews and
assessments had exposed. ... Show more content on Helpwriting.net ...
They can't find the time and resources to do so. But for those who recognized SOX's advantages
from the start they have figured out to leverage the law in order to realize the improvement plans.
SOX's implementation brought many positive changes to several companies. Compliance with SOX
strengthen the good governance of the organization; instill ethical values and exhibit behavior to
both employees and the executive levels. As mandated by the law executives have to attest
personally the effectiveness of internal control and the independent auditor has to attest yearly on
the company's evaluation of such controls. Auditor is expected to assess the documentation of
control and procedures and the competency of employee's performance. With the advent of this law,
executives discovered an opportunity to correct and improved the job–description documentation,
thereby employees can understand the company's

The Sarbanes-Oxley Act Summary
The Sarbanes–Oxley Act(SOX) of 2002 was passed by the U.S congress to protect business
investors from fraudulent activities by the corporations. The Sarbanes–Oxley Act passed down in
responses to a series of high–profile financial scandals that occurred in the early 2000s at companies
including WorldCom and Tyco that rattled investor confidence. The result was almost $6 trillions of
stock market value loss. The act, drafted by U.S. Congressmen Paul Sarbanes and Michael Oxley,
was aimed at improving corporate governance and accountability.
Due to SOX Act, Tens of thousands of companies face the task of ensuring their accounting
operations of following the Sarbanes–Oxley Act section. Auditing departments typically first have a
comprehensive external audit by a ... Show more content on Helpwriting.net ...
Trinity stated net income in their financial statement for 2010, 2011, and the first two quarters of
2012. Later found out that instead of income of $4.9 million it was $25.6 million loss. As a result,
Trinity's former Chief Executive officer William Enloe was found guilty involves fraudulent
manipulation of the company's financial results and failure to implement sufficient internal
accounting controls and the violation of SOX Act.
The check and balance system is one of the internal controls business use where no one has control
of one another. This system involves more than one personal, it separate handling (receipt and
deposits) functions from record keeping functions.. This method help keep financial reported more
accurate which prevent accounting fraud
The protection of cash in a business is number one priority. Which bring us to the next internal
control to protection of cash funds. All funds must keep in locked box or drawer and restrict the
number of employees who have access to the key. Also limit the petty cash replenishment amount to
a total that will require replenishment at least

LBJ Company has plans to go public, and the president requested an evaluation from our firm to
understand the new rules of regulations. First of all, the firm will analyze rules that affect company's
transition from private to public. Second of all, LBJ Company should understand all internal
controls system the Sarbanes–Oxley Act of 2002 enforced. This act requires that companies must
maintain an acceptable internal controls systems. Also, it protects companies from corporate fraud
by ensuring that these companies follow and apply specific procedures. All member of corporations
should make sure that these controls are adequate and reliable. Furthermore, following the
Sarbanes–Oxley Act of 2002, companies are more likely to attract investors ... Show more content
on Helpwriting.net ...
As the first bad practice, the company allows only one accountant to be in charge of the company's
financial duties. In the other hand, it can cost the company a lot of money due to the possibility of
fraud. The accounting firm recommended the company to hire someone else fill out one of the
accountant's actual positions to avoid segregation of duties. Another wrong practice is the handling
of the petty cash. We recommend that the company uses the control activity called "establishment of
responsibility." Therefore, the company should only allow one person to handle the petty cash, and it
will prevent theft to occur. Regarding the human resource control activity, HR professionals of LBJ
Company should conduct a background investigation for candidates. Also, conducting background
checks is not expensive and can reduce employees' fraud and

The Sarbanes Oxley Act
Abstract This research paper endeavors to expose how the Sarbanes– Oxley Act of 2002 might have
led to the accountability of holding corporate executives for their actions in the past and also in the
future. The paper will examine and explore the genesis of the Sarbanes–Oxley Act as well as give
details on the act's relationship to the ethics of the institution and the persons who work and manage
the institution. The paper also proceeds to discuss different corporations around the globe that have
been endorsed with the Sarbanes– Oxley Act and their subsequent benefits and demerits as opined
by different individuals. The paper shall prove to be a relevant tool for any administrator managing a
public company. Anyone going through this ... Show more content on Helpwriting.net ...
Such scandals cost businessmen great sums of million dollars when affected companies collapsed in
their share prices thus the confidence of the public in the country's security markets was affected
adversely. In July 2002, when the bill was being passed, there was intense pressure on the Congress
to restore people's belief in the capital markets before elections to the Congress (Act, S, 2002).
Some of the new and impressive regulations in the act are as discussed in the proceeding
paragraphs. Firstly there have been alterations to the functions of the high–ranking management.
The CFO and CEO are affected in various ways by the act. They are now demanded to certify the
suitability of disclosures and financial statements in person. The officers must also ensure and prove
that the presentation of such documents is fair regarding the operations and financial operations of
their firm. According to the act, the CEOs have to append their signatures on federal company
revenue returns. The act prohibits individual loans to the high–ranking executives. Any situation
requiring the organization to reaffirm its financial status because of property noncompliance with
financial reporting prerequisites, calls for the officers to refund the organization for any bonuses.
Secondly, there are changes to corporate

Sarbanes Oxley Act
Sarbanes–Oxley Act
The Sarbanes–Oxley is a U.S. federal law that has generated much controversy, and involved the
response to the financial scandals of some large corporations such as Enron, Tyco International,
WorldCom and Peregrine Systems. These scandals brought down the public confidence in auditing
and accounting firms. The law is named after Senator Paul Sarbanes Democratic Party and GOP
Congressman Michael G. Oxley. It was passed by large majorities in both Congress and the Senate
and covers and sets new performance standards for boards of directors and managers of companies
and accounting mechanisms of all publicly traded companies in America. It also introduces criminal
liability for the board of directors and a requirement by ... Show more content on Helpwriting.net ...
There is much more of an emphasis on training and certification of auditors to understand and be
able to design processes that are in adherence to the SOX requirements (Michelman, Waldrup, 32,
33). These changes in accounting processes are just the beginning of the much broader and much
more pervasive changes at the fundamental business level within companies. The changes required
by SOX also force entirely new approaches to managing, reporting, sorting, and accessing financial
information, often requiring new IT systems and processes as well. The coordination of IT systems
and processes, accounting and reporting, and the definition of entirely new business processes are all
happening at the same time in many publicly–held companies in the U.S. through even 2009. The
exponential growth of Indian outsourcing companies who have expertise in Business Process
Management (BPM) have correspondingly seen an increase in their business, as many smaller
American publicly–held companies do not have the people or the expertise to get their processes,
systems, IT plans and accounting and reporting functions in compliance with the SOX standard in
any meaningful period of time (Radtke, et.al.) As a result, many accounting professionals also must
manage outsourcing contracts with companies who specialize in BPM and SOX

Sarbanes-Oxley Act Analysis
Sarbanes–Oxley Act 2002 With the fall of Enron, WorldCom, and several other major corporations
in the late 1990's, the need for transparency and accountability in accounting was brought to the
forefront for investor's and board member's alike. Paul Sarbanes, a former senator from Maryland,
and Mike Oxley, a former member of the House of Representatives from Ohio, together created
what is now known as the most important legislation since the 1930's (Litvak, 2014). This bill, also
known as the Public Company Accounting Reform and Investor Protection Act, changed the way
companies that offer public securities did business. No longer would a publicly offered company get
to create and govern its internal controls; they would now be regulated by ... Show more content on
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Many venture capitalistic companies did not or financially could not comply with the new
regulations and requirements provided for in the act, so they took their companies to the private
sector, no longer offering shares on the public exchange (Ecer & Kahlid, 2013). The main
disadvantage to companies regarding SOX is Section 404, the internal controls portion of the act.
The major complaint– the requirements of section 404 are "new, radical and ill–considered" (Gupta,
Weirich, & Turner, 2012). The internal controls section requires companies to report on their internal
control structure and procedures for financial reporting through annual audits, which for small
companies is very costly. However, in 2010, the Dodd–Frank Wall Street Reform and Consumer
Protection Act allowed for the permanent exemption of issuers with a market value of less than $75
million from the Section 404 of the SOX negating this disadvantage, at least for these non–
accelerated firms. The additional time needed to implement the requirements of SOX caused issues
as well, impacting those small firms the hardest. In addition, investors of foreign companies were
not happy with the new regulations of SOX and an estimated loss of five to ten percent of market
capital occurred (Litvak,

The Sarbanes–Oxley Act and how it has affected America The time frame is early 2002, and the
news breaks worldwide. The collapse of corporate giants in America amidst fraud and stock
manipulations surfaces. Enron, WorldCom, HealthSouth and later Adelphia are all suspected of the
highest level of fraud, accounting manipulation, and unethical behavior. This is a dark time in
history of Corporate America. The FBI and the CIA are doing investigations on all of these
companies as it relates to unethical account practices, and fraud emerges. Investigations found that
Enron, arguably the most well–known, had long shredding sessions of important documents and
gross manipulation of stocks and bonds. This company alone caused one of the biggest economic ...
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The Securities and Exchange Commission (SEC) is an agency created by the federal government to
protect the investors and regulate the securities markets, as well as monitoring the corporate
takeovers in the United States (Jones, 112). The SEC oversees security transactions, mutual fund
trading, and activities of financial professionals to international deception and prevents fraud. With
certain exceptions, the Commission has the authority to regulate trading and issuance of law
securities that are offered to the public, it also requires the issuers to provide the investors with
sufficient information in order to make informed

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