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Pros And Cons Of The Sarbanes-Oxley Act

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Pros of the Sarbanes-Oxley Act (SOX) It created a requirement that critical information about companies be revealed by the companies to their shareholders. This part of the Act may increase the confidence of the shareholders and attract more shareholders. It created rules regarding accounting practices and internal controls. Reports that describe the sufficiency and effectiveness of its accounting internal controls must be filed quarterly by the management of the company. There is an accountability requirement for the people reporting the financial information. According to the "Financial Web", "If they do not do their jobs properly, they will have to face the consequences. The legislation put specific steps in place that have to be followed in order to avoid any type of …show more content…

Since the Act was enacted, it takes more money and resources to stay in compliance with it. According to "Asia - Pacific Economics Blog" (2014)," ... there are no rules or guidelines on how to implement the system the act imposes ... every company needs to come up with their own way of doing things, and if they do them wrong, they will have to face the consequences. Furthermore, for a company to develop a system to implement these rules means that a costly process must be performed.” (Sarbanes-Oxley Act Pros and Cons). It created a need for auditors to charge more in their fees for service due to their increased liability. According to "Connect Us - The Global Issues Blog" (2015), "Since 2002, audit fees have increases (increased) substantially as a result of auditors being forced to be more accountable for the audit reports on their clients.” (4 Serious Pros and Cons of the Sarbanes-Oxley Act). References: Connect US - The global issues blog. (2015). Retrieved from

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