Sarbanes-Oxley Act Advantages And Disadvantages

Introduction The Sarbanes-Oxley Act was one of the best rules and regulations that were passed for accountants. However, it did have its advantages and disadvantages. It was signed to address all the audit failures and all the trust issues with the public accounting market and to possibly put a stop to all the corporate financial accounting scandals that were taking place during the years of 2000 and 2002. `“One who is faithful in a very little is also faithful in much, and one who is dishonest in a very little is also dishonest in much. If then you have not been faithful in the unrighteous wealth, who will entrust to you the true riches? And if you have not been faithful in that which is another's, who will give you that which is your own?”
There were a lot of guidelines that had to be followed which means there were a lot resources needed. Therefore, there was a lot of money spent. This could have very well taken a toll on the company profits. However, one of the major disadvantages of SOX was Rule 303 - Influence on Conduct of Audits.
“It shall be unlawful… for any officer or director of an issuer, or any other person acting under the direction thereof, to take any action to fraudulently influence, coerce, manipulate, or mislead an independent public or certified accountant engaged in the performance of an audit of the financial statements of that issuer for the purpose of rendering such financial statement materially misleading” (Dodd-Frank Wall Street Reform, 2002).

This rule makes it where auditors cannot have undue influence over another auditor to help protect any business entity. Another disadvantage of the SOX is rule 404. This is where the additional cost comes in to the company. This rule creates more work for the auditor. The auditor has to spend more time and do more research to give the most accurate assessment of the internal controls of the company that is being audited. The most important aspect of the proposal is the accumulation and structuring of accepted best practices for internal controls (Giordano,
they sit on the sidelines worrying more about rules and regulations than they do about making money.. If we have to go to a book keeping system as opposed to an accounting system then we're going to strangle the American enterprise system,” (Oziel, 2002). I think the SOX has definielty been revised to where the amount of fraud will be notice on the behalf of the CFO’s and CEO’s. I feel that they have become very knowledgeable and definitely more responsible of all transactions that are being taking place in their organization. Galations 6:7-8 states “Do not be deceived: God is not mocked, for whatever one sows, that will he also reap. For the one who sows to his own flesh will from the flesh reap corruption, but the one who sows to the Spirit will from the Spirit reap eternal life,” (Smith,