Sarbanes-Oxley Act of 2002 is a law enacted by US congress in July 30, 2002. The bill consists of 11 sections and was created as a reaction to high numbers of fraud and business misbehavior in major US corporations. The act clearly imposes responsibilities for the board of directors and defines the regulations all corporations have to comply with. The bill does not affect only US public companies, but it goes beyond that to over control companies under a US presence. It requires each organization to provide financial reports to SOX administration to evaluate the data and assure the company comply with the law or otherwise it will be under criminal or civil penalties. Upon establishment of the law, criticism has grown among most companies and corporations. One of the main issues from a corporate perspective was the act generally established without the consideration of the company’s size and profits, which greatly affects small businesses and reduce their future progress and enhancements. Another major issue was the cost to comply with the law. Most small business has reported over $500,000.00 per year to cover their auditing and other resources costs in order to ollow the act …show more content…
It intensifies the need of internal control to ensure all financial transactions were preformed the way they were supposed to and to avoid any errors in the company’s balance book. Internal controls are required to be tested quarterly by management to evaluate their effectively. Another benefit of SOX is it reveals critical information to shareholders that help them making better investment decisions and increase their confidence and protection which then lead to more cash flowing into the market. The act also provides specific steps for CEOs and managers to follow while performing their jobs, these steps and procedures will protect these individuals from making wrong decisions and make them less accountable and vulnerable to