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Sarbanes-Oxley Act Pros And Cons

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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. The Sarbanes-Oxley majorly specializes in the auditing and inner manage. The modifications that have been made at the Sarbanes-Oxley Act hence brought about changing of the audit techniques that were formerly utilized by the auditors then. The new techniques which are used currently are friendly to the stakeholders as they guard them from falsified practices. …show more content…

The accountants for example aren't allowed on being too close or worried in a companies’ evaluation of its dangers as this could lead the accountants in becoming objectively impaired of their obligation to reach selections effectively and efficiently. The Act has also led expanded fees on the management for the reason that new strategies and techniques were involved because the common audits strategies have been scrapped off, the control for this reason do face the cost of enforcing the new guidelines. though, regardless of the high value that the control suffers, it is a blessing in hide because the Act dramatically modified the company landscape which became almost doomed. The Act mandates precise practices into regulation and this has helped in attracting traders in companies main to extended profits. The Sarbanes Act has also brought about strengthening of money owed committees in which the committees do acquire a huge leverage in overseeing the top management accounting

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The financial scandals in early 2000s caused the Sarbanes-Oxley Act of 2002 to be created. Enron, WorldCom and the accounting firm, Arthur Andersen, to intentionally mislead their shareholders by exaggerating their profits and understating their expenses. The scandals had raised the importance of internal control for enhancing corporate governance. Therefore, the government established the SOX to protect the interest of the investors and employees and to monitor the companies and auditors.

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