Sarbanes Oxley Corporate Responsibility For Financial...

Few pieces of legislation have had an impact on corporations, accounting firms, and investors like Sarbanes-Oxley. Sarbanes-Oxley was passed by Congress in 2002 as direct result of the accounting scandals that plagued the public equity markets during the late 1990s and early 2000s. Sarbanes-Oxley was developed to be a series of measures, safeguards, guidelines, and criminal punishments in order to prevent future accounting scandals on the scale of Enron and Worldcom. Sarbanes-Oxley has profoundly impacted both management and accountants albeit in mostly similar ways. The following exploration will compare and contrast these views held by management and accountants regarding Sarbanes-Oxley. According to Green (2004) Sarbanes-Oxley†¦show more content†¦Management views these changes as an additional risk that they were not previously subject to. Section 302 was intentionally designed to prevent management teams from stating that they did not fully approve of the information in their company’s financial statements and annual reports. Section 302 requires management to become more aware of the internal control environment of their company. Prior to Sarbanes-Oxley, internal controls were not a significant corporate edict and were left to the charge of internal accountants, not high level executives. Accountants are not significantly impacted by Section 302. Accounting firms were able to generate significant internal control design consulting fees during the first few years after the enactment of Section 302. Section 401 covers additional Disclosures in Periodic Reports. These additional disclosures include all material off-balance sheet liabilities, obligations, or transactions. Management views Section 401 as a significant hindrance to what used to be a rather common management technique: absorb the benefits of a business transaction onto the issuing company’s financial statements but leaving the liabilities or obligations on the non-issuing and non-consolidated entity. Accountants view Section 401 as a significant contributing factor to the increased liability exposure of poor audits. Accounting firms revised their audit Sarbanes Oxley Corporate Responsibility For Financial... Different portions of legislation have had an impact on corporations, accounting firms, and investors like Sarbanes-Oxley. Sarbanes-Oxley was passed by Congress in 2002 as a direct result of the accounting scandals that plagued the public equity markets during the late 1990s and early 2000s. Sarbanes-Oxley was developed to be a series of measures, safeguards, guidelines, and criminal punishments in order to prevent future accounting scandals on the scale of Enron and Worldcom. Sarbanes-Oxley has profoundly impacted both management and accountants although in mostly similar ways. The following exploration will compare and contrast these views held by management and accountants regarding Sarbanes-Oxley. According to Green (2004) Sarbanes-Oxley legislation is comprised of various sections, of which five are the most significant. These sections are Section 302, Section 401, Section 404, Section 409, and Section 802. Section 302 pertains to Corporate Responsibility for Financial Reports. This section requires the management of the issuing company to certify that the officers have reviewed the report, financial statements and accompanying notes and supplementary information are free from material misstatement. The financial statements and accompanying notes and supplementary information are free from material omissions, that management has evaluated internal controls within the previous 90 days and reported on their internal control findings. Any significant changes in internalShow MoreRelatedSarbanes Oxley : Corporate Responsibility For Financial Reports750 Words   |  3 Pagesimpact on corporations, accounting firms, and investors like Sarbanes-Oxley. Sarbanes-Oxley was passed by Congress in 2002 as direct result of the accounting scandals that plagued the public equity markets during the late 1990s and early 2000s. Sarbanes-Oxley was developed to be a series of measures, safeguards, guidelines, and criminal punishments in order to prevent future accounting sc andals on the scale of Enron and Worldcom. Sarbanes-Oxley has profoundly impacted both management and accountantsRead MoreSarbanes Oxley Act : A Important Part Of Business1215 Words   |  5 PagesA vital part of business today is the Sarbanes-Oxley Act. It was created to protect the integrity of business and the interest of consumers and investors. The Sarbanes-Oxley Act enforces the monitoring of finance data and information technology as it relates to storage of information. It requires the audit of a company’s assets, accounting and finance. The act requires certifications by top company officials’ to guarantee that data submitted is true and accurate. Monitoring to ensure complianceRead MoreACC 561 Week 2 Individual Assignment Sarbanes Oxley Act Of 20021432 Words   |  6 Pagesï » ¿Sarbanes–Oxley, Sarbox or SOX, is a United States federal law which was introduced in 2002. It is also known as the â€Å"Public Company Accounting Reform and Investor Prot ection Act† and â€Å"and Corporate and Auditing Accountability and Responsibility Act†. The main objective of the act is to protect investors by improving the accuracy and reliability of corporate disclosures. New aspects are created by SOX act for corporate accountability as well as new penalties for wrong doings. It was basically introducedRead MoreSarbanes-Oxley Act Acc 403- Auditing1443 Words   |  6 PagesSARBANES-OXLEY ACT ACC 403- AUDITING PROFESSOR August 19, 2012 The Sarbanes-Oxley Act was placed into effect July 2002; the act introduced major changes to the regulation of corporate governance and financial practice. The Sarbanes-Oxley Act was named after Senator Paul Sarbanes and Representative Michael Oxley, who were the main architects that set a number of non-negotiable deadlines for compliance. The organization for Economic Cooperation and Development was one of the first non- governmentRead MoreThe Sarbanes Oxley Act ( Act ) Essay1432 Words   |  6 Pages The Sarbanes Oxley Act is an act passed by the United States Congress to protect investors from the possibility of fraudulent accounting activities by corporation. The Sarbanes Oxley Act has strict reforms to improve financial disclosures from corporations and accounting fraud. The acts goals are designed to ensure that publicly traded corporations document what financial controls they are using and they are certified in doing so. The Sarbanes Oxley Act sets the highest level and mos t general requirementsRead MoreThe Sarbanes-Oxley Act Essay1162 Words   |  5 PagesIntroduction The Sarbanes-Oxley Act, or SOX Act, was enacted on July 30, 2002. Since it was enacted that summer it has changed how the public business handle their accounting and auditing. The federal law was made coming off of a number of large corporations involved in scandals. For example a company like Enron was caught in accounting fraud in late 2001 when the company was using false financial statements. Once Enron was caught that had many lawsuits filed against them and had to file for bankruptcyRead MoreThe Sarbanes Oxley Act Of 2002 Essay1070 Words   |  5 Pagesof Sarbanes-Oxley Act of 2002. This Act was placed into law to protect the consumer against fraudulent activity by organizations. This paper will provide a brief history of the law and discuss some of the ethical components and social implications on corporations. This research will provide information on how the Sarbanes-Oxley Act affects smaller organizations and how it encourages employees to inform of wrong doings. Brief Synopsis of Sarbanes-Oxley The U.S. Congress passed the Sarbanes-OxleyRead MoreSarbanes Oxley And The Oxley Act1358 Words   |  6 Pagesseries of financial scandals that took place by large companies such as Enron, Tyco, and WorldCom. The impact of these scandals was significant. Investors lost large amounts of money. Employees of the scandalous companies not only lost their jobs but lost their life savings. The financial scandals that had taken place were so severe that an Act was created in response to them in hopes to prevent these scandals from happening. The Sarbanes-Oxley Act, also referred to as SOX or Sarbanes-Oxley, was createdRead MoreThe Sarbanes-Oxley Act of 20021668 Words   |  7 PagesThe Sarbanes-Oxley Act of 2002 The Sarbanes-Oxley Act of 2002 The Act Impact ACC 410, Jackie Lewis, Ph.D. Abstract The Sarbanes-Oxley Act, officially named the â€Å"Public Company Accounting Reform and Investor Protection Act of 2002†, is recognized to be the most noteworthy U.S. federal disclosure and corporate governance legislation since the Securities Act of1933 (the Securities Act) and the Securities Exchange Act of 1934 (the Exchange Act). Furthermore, the provisions of the Act areRead MoreSarbanes Oxley Act Of 2002956 Words   |  4 PagesSarbanes-Oxley Act In reaction to a number of corporate and accounting scandals which included Enron Congress passed The Sarbanes-Oxley Act of 2002 (SOX) (Sarbox) also known as the Public Company Accounting Reform and Investor Protection Act† and the Corporate and Auditing Accountability and Responsibility Act was enacted July 30, 2002. The Sarbane-Oxley Act is a US federal law that created new and expanded laws regarding the requirements for all US public company boards, management, and accounting