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Sarbanes-Oxley Act Of 2002 Essay

358 Words2 Pages

Financial ethics refers not only to value relevant to money, but it refers to value relating to the acts conducted by mangers within firms. Goethe Business School proclaimed, “Managers in finance need to elaborate a deep understanding of rational and therefore, institutional constraints to align their business and organization” (Goethe Business School, n.d.).

The Sarbanes-Oxley Act, abbreviated as the SOX Act of 2002 is a regulation which was passed by the Congress of the United States of America. The purpose of this legislation is to safeguard investors and others within the society from inaccuracies related to accounting, as well as unjustifiable procedures in businesses. This act has aimed to increase the precision of the information revealed by firms.

Additionally, the United States Securities …show more content…

There are two sections of the act which promotes financial security. Section 302 demands top management to verify the preciseness of financial statements. On the other hand, Section 404 ensues that internal controls and the recording of procedures are created, to confirm if the methods used are effective, as it relates to these controls. Internal controls are enforceable by finance managers along with auditors.
On the other hand, the United States Securities and Exchange Commission is a federal agency which works towards safeguarding investors. SEC has established a division called the Financial Reporting and Audit Group (FRAud Group), which strives to “Identify and prosecute securities law violations related to financial reporting and audit failures” (SEC, 2017).
Additionally, FRAud continually searches for aspects vulnerable to financial reporting, which are dishonest. Therefore, the group continually analyzes financial statement emendations through the incorporation of advanced technological

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