Auditing paper
“Accounting did not cause the recent corporate scandals, unreliable financial statements were the results of management decisions, fraudulent or otherwise”. (Lin & Wu, 2006, para. 5) Waste Management, HealthSouth, Enron, Satyam and Madoff are just a few names that come to my mind when I think of fraudulent accounting. Disguised loans, inflated income, improper accounting and misstated earnings, different words all describing the same thing, FRAUD. Fraud affects the company, the consumers and it puts the entire economy at risk. According to the Huffington Post the top scandals of all time produced losses due to fraud totaling over one hundred and sixty nine BILLION dollars. ("The biggest accounting," 2010)
Upon first glance the Sarbanes Oxley Act of 2002 which was signed into law on July 30th 2002 seemed like a great policy geared towards preventing fraud. Investors as well as the general public had lost faith in the financial system after the above mentioned companies defrauded them. The Sarbanes Oxley Act also known as SOX was created with the intention of restoring financial confidence within the public.
The Sarbanes Oxley Act of 2002 is a complex series of regulations, it is also “one of the most influential—and controversial—pieces of corporate legislation ever to have hit a statute book” ("A price worth," 2005, para. 1). The fact that SOX is very controversial is not at the heart of this paper. The objective of this paper is to allow me to make an informed decision on whether or not I believe The Sarbanes Oxley Act of 2002 has proven to be effective and worth the initial cost.
The Sarbanes Oxley Act of 2002 is made up of many sections, I am going to focus on the sections that I feel have the most importance and offer the greatest benefits. My intention is to describe the purpose of each section along with any pros and/or cons that may sway my opinion one way or another.
Section 201 states that public accountants who audit the financial
Upon first glance the Sarbanes Oxley Act of 2002 which was signed into law on July 30th 2002 seemed like a great policy geared towards preventing fraud. Investors as well as the general public had lost faith in the financial system after the above mentioned companies defrauded them. The Sarbanes Oxley Act also known as SOX was created with the intention of restoring financial confidence within the public.
The Sarbanes Oxley Act of 2002 is a complex series of regulations, it is also “one of the most influential—and controversial—pieces of corporate legislation ever to have hit a statute book” ("A price worth," 2005, para. 1). The fact that SOX is very controversial is not at the heart of this paper. The objective of this paper is to allow me to make an informed decision on whether or not I believe The Sarbanes Oxley Act of 2002 has proven to be effective and worth the initial cost.
The Sarbanes Oxley Act of 2002 is made up of many sections, I am going to focus on the sections that I feel have the most importance and offer the greatest benefits. My intention is to describe the purpose of each section along with any pros and/or cons that may sway my opinion one way or another.
Section 201 states that public accountants who audit the financial