Acct5600_Sarbanes Oxley Paper Rajaram 1 
Understanding the Sarbanes-Oxley Act (SOX) and its impact on
Generally Accepted Accounting Principles (GAAP)
Chan Rajaram
This paper is submitted in partial fulfillment of the requirements for graduation from Accounting Theory and Practice (BUSN 5600)
Webster University
Summer 2015
Abstract
To discuss the origin and background of the Sarbanes-Oxley Act (SOX) and how it was implemented with an aim to improve accountability in the financial reporting process of all public companies. We will further clarify the role SOX has played, since it was established, in improving the effectiveness of internal financial auditing controls of all public companies to the Securities and Exchange Commission (SEC). And lastly, the impact of SOX on the Generally Accepted Accounting Principles (GAAP) – the accepted method for accountancy (the practice of accounting). The impact of this legislation, according to President Bush, was “the most far reaching reforms of American business practices since the time of Franklin Delano Roosevelt” (President Bush, 2002, para. 4).
Introduction / background on how SOX came about
The Sarbanes-Oxley (SOX) act was signed into law in 2002 by President Bush as a way to invigorate confidence in the integrity of corporate disclosures and financial reporting. SOX passed in the Senate 99–0 and cleared the House with only three dissenting votes. The details of the SOX address many of the tactics companies had used to "cook the books" over the years in trying to follow established standards for financial accounting and reporting. For the past 70 years, U.S. securities laws have required regular reporting of results of a company's financial status and operations. However, SOX focuses on the accuracy of what's reported and the reliability of the information-gathering processes. In order “to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes,”
Generally Accepted Accounting Principles (GAAP)
Chan Rajaram
This paper is submitted in partial fulfillment of the requirements for graduation from Accounting Theory and Practice (BUSN 5600)
Webster University
Summer 2015
Abstract
To discuss the origin and background of the Sarbanes-Oxley Act (SOX) and how it was implemented with an aim to improve accountability in the financial reporting process of all public companies. We will further clarify the role SOX has played, since it was established, in improving the effectiveness of internal financial auditing controls of all public companies to the Securities and Exchange Commission (SEC). And lastly, the impact of SOX on the Generally Accepted Accounting Principles (GAAP) – the accepted method for accountancy (the practice of accounting). The impact of this legislation, according to President Bush, was “the most far reaching reforms of American business practices since the time of Franklin Delano Roosevelt” (President Bush, 2002, para. 4).
Introduction / background on how SOX came about
The Sarbanes-Oxley (SOX) act was signed into law in 2002 by President Bush as a way to invigorate confidence in the integrity of corporate disclosures and financial reporting. SOX passed in the Senate 99–0 and cleared the House with only three dissenting votes. The details of the SOX address many of the tactics companies had used to "cook the books" over the years in trying to follow established standards for financial accounting and reporting. For the past 70 years, U.S. securities laws have required regular reporting of results of a company's financial status and operations. However, SOX focuses on the accuracy of what's reported and the reliability of the information-gathering processes. In order “to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes,”