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Sarbanes-Oxley Act Pros And Cons

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SARBANES- OXLEY ACT: COSTS AND BENEFITS Introduction The purpose of this report is to provide information about the costs and benefits of the Sarbanes-Oxley Act (SOX). The Sarbanes- Oxley Act was enacted by the U.S. Congress in 2002, following corporate debacles and is described as the most sweeping corporate legislation since the Securities Acts of 1933 and 1934. It includes detailed provisions dealing with corporate governance and various auditing issues designed to help restore investor confidence. Preceding the enactment of the SOX, the failures of certain corporations due to financial scandals resulted in significant losses to investors and creditors. The SOX was introduced to address the issues of accounting malfeasance by attempting to improve transparency. The act was authorized in the wake of public disgust aroused by corporate scandals that lead to the collapse of major firms like Enron and WorldCom. The main objective of the act was to reinstate public confidence in corporate financial statements. It was aimed to increase the accountability of the board of directors to shareholders and to improve the accuracy and reliability of financial disclosures. …show more content…

Proponents of the act argue that the law was necessary to restore public faith and prevent another outbreak of accounting frauds. On the contrary, opponents argue the law is detrimental to the economy and particularly harmful to small firms due to the high implementation cost it imposes. Given the preceding, the report examines the cost and benefits associated with the implementation of Sarbanes-Oxley Act. The report is composed of four parts: (1) Summary of SOX and its requirements (2) Costs of SOX (3) Benefits of SOX (4) Conclusions and

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It is very hard to say that SOX would prevented the scandal but they would have being exposed sooner because of the Sarbanes-Oxley section and titles rules and regulation such as; Titles II the auditors partner rotation; Title III, the responsibility or reporting accurate financial corporate reports. They reported depreciation expenses of garbage trucks as a salvage values, and subjective to other assets that did not have any value. Title IV the financial disclosures of financial reports was overstated or understated in some reports to inflates a high profit margin. The Titles VIII, the alteration and destruction of records that would protect the

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Named after its creators Senator Paul Sarbanes and Representative Michael Oxley, the Sarbanes–Oxley Act of 2002 (SOX) was enacted on July 30, 2002 by President George W. Bush. .Sox is also known as the Public Company Accounting Reform and Investor Protection Act of 2002. It is widely known as the most significant reform since the formation of the Securities and Exchange Commission of 1943. Consequently major corporate scandals such as Enron, Worldcom and Tyco led to The Sarbanes Oxley Act. The act sets strict reforms to the financial practices and corporate governance of public corporations, accounting and management firms.

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The creation of the Sarbanes-Oxley Act of 2002 (SOX Act) by senator Paul Sarbanes and representative Michael G. Oxley impacted a change in the way accounting was reported by government and non government bodies. It’s creation stemmed from the many corporate scandals occurring at the time such as Enron and Worldcom. The creation of this act opened many channels for the government to enforce oversight into the inner practices of large corporations. The Sarbanes-Oxley Act of 2002 was the drastic change the government needed to manage and review corporate financials and reporting practices. By forcing corporations to comply with a more stringent set of regulations and allowing the government an audit and oversight board, they were allowed to positively

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Sarbanes-Oxley Act The Sarbanes-Oxley Act is an act that becomes handed by using the yank Congress in 2002 in a bid to protect the investors who consist of shareholder and different stakeholders from fraudulent accounting practices (Protiviti 2011). It turned into delivered to be by two main architects who're Paul Sarbanes and Michael Oxley. The Sarbanes Act majorly regulates financial practices and corporate governance.

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The Sarbanes-Oxley (SOX) Act of 2002 was established to protect the stockholder and public from accounting practices that fail to or overstate or understate the financial worth of the enterprise (SOX, 2010). Another area of policies that are typically overlooked is disaster recovery (DR) or business continuity (BC). These plans are created to mitigate issues that can arise from threats, accidents, and natural disasters.

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