Article Review: Sox Act of 2002
What is the Sarbanes-Oxley Act of 2002 and what is its purpose? The Sarbanes-Oxley Act of 2002 was designed and passed to protect investors of corporations from the possible acts of fraudulent accounting activities by corporations. The SOX Act’s purpose is to commend and force ethical business practices among businesses across all industries. The overall goal was to protect financial records that organizations keep to help further protect against any and all accounting fraud. Major corporations like ENRON, TYCO, and WORDLCOM had to deal with major issues with reporting improper accounting records to investors and the resulting consequences of their actions. The scandals caused by these corporations forced the U.S. Congress to implement the SOX Act and enforce rules that would penalize any wrongdoingon the part of the offending company. Several measures were enforced in the SOX Act of 2002.
The SOX Act has two key provisions, which pertain to the necessary actions that must be taken by businesses in order to abide by the SOX Act and avoid penalty and possible jail time. The firs of which is Section 302 of the SOX Act which states that senior management sign off of the accuracy and validity of the accounting records and financial statements. The other key provision is Section 404. Section 404 details must establish internal controls and reporting methods to also verify the validity of records and have reports on how adequate these methods are.
For companies that have violated the SOX Act strict penalties are in force. Some companies may try to rid the problem of ever existing by shredding documents to escape being caught. If a company knowingly falsifies, alters, covers-up, or destroys any litigation related paperwork that company is subject to punishment for criminal obstruction and would likely face heavy penalty and jail time under Section 802 of the SOX Act. Section 802 states the penalties for which a company could face for the destruction of documents could
The SOX Act has two key provisions, which pertain to the necessary actions that must be taken by businesses in order to abide by the SOX Act and avoid penalty and possible jail time. The firs of which is Section 302 of the SOX Act which states that senior management sign off of the accuracy and validity of the accounting records and financial statements. The other key provision is Section 404. Section 404 details must establish internal controls and reporting methods to also verify the validity of records and have reports on how adequate these methods are.
For companies that have violated the SOX Act strict penalties are in force. Some companies may try to rid the problem of ever existing by shredding documents to escape being caught. If a company knowingly falsifies, alters, covers-up, or destroys any litigation related paperwork that company is subject to punishment for criminal obstruction and would likely face heavy penalty and jail time under Section 802 of the SOX Act. Section 802 states the penalties for which a company could face for the destruction of documents could