Sox Act Memo

The main objective of the Sarbanes-Oxley act was to reduce fraud. So far that objective seem to have been obtain. Since SOX was enacted, there has not been a major domestic corporate financial scandal uncovered other than the options back-dating scandal that occurred before July 2002 (Jahmani & Dowling, 2008). It is a tax advantage because companies and investors are not losing money.

PART C: It seems that whenever there is a corporate scandal, Congress responds by trying to strengthen the laws. Sarbanes-Oxley was passed to address the Enron accounting abuses. Review the video links and information about Sarbanes-Oxley found in the text and module. Many of the SOX provisions were contained in the Federal Sentencing Guidelines.

Prior to the 2002 scandal of Enron, the standards for financial reporting were much more relax than the regulations that businesses encounter today. The Sarbanes Oxley Act of 2002(SOX) came into play as a response to the unruly financial reporting to the public from companies such as Enron, Arthur Andersen, Tyco and WorldCom. The public scandals created insecurities for any American to invest in big companies, due to fear of additional fraud encounters. The Sarbanes Oxley Act was enacted to try create some trust between these big companies and the hardworking individuals who were investing in them. The fraud scandals were front page news stories and the government hoped that passing this legislation

In reaction to a number of corporate and accounting scandals which included Enron Congress passed The Sarbanes-Oxley Act of 2002 (SOX) (Sarbox) also known as the "Public Company Accounting Reform and Investor Protection Act” and the "Corporate and Auditing Accountability and Responsibility Act" was enacted July 30, 2002. The Sarbane-Oxley Act is a US federal law that created new and expanded laws regarding the requirements for all US public company boards, management, and accounting firms. The act has a number of provisions that apply to privately owned companies. The Act addresses the responsibilities of a public corporation’s Board of Directors, adds criminal penalties for misconduct, and requires the SEC to create regulations that define how public corporations are expected to comply with the law. The SOX increases the penalties a company pays for fraudulent financial activity, and requires top management to provide individual verification to certify the accuracy of financial information, while also increasing the oversight role of a company’s Board of Directors and the independence of outside auditors.

The Sarbanes-Oxley Act of 2002 is a preventative measure passed by congress which protects investors from corporate fraud. Company loans were banned to executives and provided job protection to whistleblowers. Financial-literacy of corporate boards and independence are strengthen by the act. Errors in accounting audits are now the responsibly of the CEO’s. Sponsors to the act were Senator Paul Sarbanes (D-MD) and Congressman Michael Oxley (R-OH) who the Act is named after.

The Sarbanes-Oxley Act is a federal law that was enacted in 2002. Enron and other similar corporate scandals led to the passing of this act. The Sarbanes-Oxley Act (SOX) is also known

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.

The Sarbanes Oxley act of 2002(SOX), also known as the public company accounting reform and investor protection act was enacted as a reaction to a number of major corporate and accounting scandals. These scandals occurred in Enron Corporation, WorldCom, Tyco International, Adelphia and Peregrine Systems. These companies and corporations were looking very financial sound and very attractive to investors. However the investors did not know that the success of these companies were cause by false reports and artificial profits. Which cost investors billions of dollars when their share prices of affected companies collapsed. Also inadequate accounting practices, bankruptcies, accounting irregularities and inefficient audit were part of these frauds

On July 30, 2002, the Sarbanes – Oxley Act was developed to help protect the public from fraud within corporation. However, it was created because positive solutions were needed after the issues from fraudulent accounting practice. For example the Enron, Tyco, and WorldCom scandals and the questions concerning governance in American Corporations that occurred in

According to an article written by D. King and C. Case in the Journal of Business and Accounting in 2014 “the Sarbanes-Oxley Act (SOX) of 2002, was no doubt, the most significant accounting and auditing legislation enacted in recent history.” On July 30, 2002, President George Bush signed into law the Sarbanes-Oxley Act due to the “Enron debacle” and other cases of corporate financial wrongdoings. The act requires that even the “top executives” of corporations must certify financial reports are accurate and be held accountable in not doing so.

This guideline helps in brining substantive change in Sarbanes Oxley Act. It has been analyzed that SOX require audit work papers and other relevant information for the period of minimum seven years. These ramifications within a short period help in improving the effectiveness of Sarbanes Oxley Act. SOX are also focused towards using the internal auditors as a critical resource management. Through the internal auditors resources within the organization can be allocated easily and frauds can be controlled (Mayo, 2010). SOX have also developed security professionals in order to handle the issues related to frauds and other internal control problems. Enron is the best example of proving the effectiveness of ramification of Sarbanes Oxley Act.

The Sarbanes-Oxley (SOX) Act of 2002 was legislated by Congress to restore reliability of financial statements with the objectives to raise standards of corporate accountability, to not only improve detection, but to also prevent fraud and abuse (Terando & Kurtenbach, 2009). Additionally, SOX was the response to general failure of business ethics such as the propagation of abusive tax shelters and greater aggressive tax avoidance strategies (Raabe, Whittenburg, Sanders, & Sawyers, 2015).

The Sarbanes-Oxley Act was enacted in response to a series of high-profile financial scandals that occurred in the early 2000’s at companies including Enron, WorldCom, and Tyco that rattles investors’ confidence (Sarbanes-Oxley Act/SOX, n.d.). The Sarbanes-Oxley Act better known as SOX was drafted by U.S. Congressman Paul Sarbanes and Michael Oxley and was put forth to improve corporate governance and accountability (Sarbanes-Oxley/SOX, n.d.). Now, all companies must be governed themselves accordingly (Sarbanes-Oxley/SOX, n.d.).

The Sarbanes-Oxley (SOX) Act of 2002 was signed into federal law on July 30, 2002. The stated purpose of the law is "to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the security laws, and for other purposes." The law has influenced long term changes in the way publicly traded companies manage auditors, financial reporting, executive responsibility and internal controls. SOX is considered the most substantial piece of corporate regulation since the securities laws of the 1930's (Stults, 2004).

The development of the Sarbanes-Oxley Act (SOX) was a result of public company scandals. The Enron and Worldcom scandals, for example, helped investor confidence in entities traded on the public markets weaken during 2001 and 2002. Congress was quick to respond to the political crisis and "enacted the Sarbanes-Oxley Act of 2002, which was signed into law by President Bush on July 30" (Edward Jones, 1), to restore investor confidence. In reference to SOX, penalties would be issued to non-ethical or non-law-abiding public companies and their executives, directors, auditors, attorneys, and securities analysts (1). SOX significantly transformed the procedures in which public companies handle internal