Sarbanes Oxley Act Sarbanes Oxley Act was instituted in 2002 as result of the financial scandals at the end of 1990’s and earlier 2000’s. The act was “named after Senator Paul Sarbanes and Representative Michael Oxley” (Soxlawcom, 2015). The act contains eleven titles. Basically, the purpose of the act was to improve corporate behavior across the country and to restore investor’s confidence in the market by placing accuracy and reliability of corporate disclosure and by imposing certain restrictions and actions in the audit process. There are different opinions throughout the country regarding the efficiency of the act. 1990’s was a time of economic prosperity. Many companies were looking very financially sound and very appealing for investors. …show more content…
Due to this reason many of these companies begin to expose financial fraud. The government believed that the impact of these actions was not going to be corrected by the free market economy. Therefore, the government did the necessary to impose legislation and to establish a consistent ethical standard across the country. The major changes of the act can be summarized in the first title of the act with “the creation of the Public Company Accounting Oversight Board, also known as the PCAOB” (Secgov, 2015). The board is allow to oversee the audit process, to establish audit rules, and to enforce the compliance of these rules by significantly increasing criminal penalties for violation of the security act. The act also mandate PCAOB to impose audit standards that requires document retention and internal control testing. The second title of the act was an amendment to the meaning of auditor’s independence. It also imposes additional …show more content…
Some of the positive feelings regarding the act is the protection and confidence that investors are regaining. Also, many companies are getting high amount of quality data because auditors continue evaluating and testing their internal control, which restrict and eliminate the weaknesses. There is also being a significant whistle blower and statutes amendments protecting them. In overall the Sarbanes Oxley Act was institute to prevent dishonesty and to improve the audit process by establishing ethical standards around the country (Wwweycom, 2015). Reference: 1. Soxlawcom. (2015). Soxlawcom. Retrieved 22 September, 2015, from http://www.soxlaw.com/ 2. Secgov. (2015). Secgov. Retrieved 22 September, 2015, from http://www.sec.gov/about/laws.shtml 3. Accountingwebcom. (2012). AccountingWEB. Retrieved 22 September, 2015, from http://www.accountingweb.com/practice/practice-excellence/has-sox-been-successful 4. Wwweycom. (2015). Wwweycom. Retrieved 24 September, 2015, from