The Sarbanes-Oxley Act
Sarbanes-Oxley Act of 2002
Michael Perez
University of Phoenix
ACC
561
Moises Rodriguez
February 21, 2014
Sarbanes-Oxley Act of 2002
In 2002, change came to the financial reporting sector for entities in the form of regulation and governance. The change, Sarbanes-Oxley or Sox Act, was a new federal law, setting new standards for financial reporting that public entities, management, and accounting firms to obey by. Sox put accountability on management to now certify the accuracy of their financial statements, information provided to the public, and increase penalties for fraudulent financial acts. Also, increase the independence between outside auditors who review financials for firms and increased oversight of Board …show more content…
The maintenance of internal control by management ensures that material information is not being provided for reports. This is essential when being assessed by our side auditors in compliance with Section 404 of Sox. It requires top management or audit committee and outside auditors to review on internal controls and whether or not they are adequate enough. This can be costly for entities to implement because samples of documentation, testing of internal controls, review of manual, and automated systems implemented by entity which enormous maintenance and time. Assessing internal control is design efficiency, outside auditors relate to specific accounts and relevant information in context of material mistake can prevent fraudulent financials being provided to the …show more content…
During Enron’s bankruptcy, investigators and auditors brought attention to off-balance-sheet instruments being used, which moved assets and debt from the off-balance sheet to make financials reports more lucrative and look like great opportunity for potential investors. According to "The Sarbanes-Oxley Act Of 2002" (2006), “Requires the disclosure of all material off-balance sheet items.” The Sox requiring disclosure of materials from off-balance-sheet items lets potential investors review financials more adequately and in-depth to prevent entities misleading investors. Which leads to section 409 stating, “ Issuers are required to disclose to public, on urgent basis, information on material changes to the financial conditions or operations. These disclosures are to be presented in a term that are easily to understand supported by trends and qualitative information of both graphics presentation as appropriate.” ("The Sarbanes-Oxley Act Of 2002", 2006) This ensures for example, that an entity must disclose any change such as moving from cash basis to accrual
Michael Perez
University of Phoenix
ACC
561
Moises Rodriguez
February 21, 2014
Sarbanes-Oxley Act of 2002
In 2002, change came to the financial reporting sector for entities in the form of regulation and governance. The change, Sarbanes-Oxley or Sox Act, was a new federal law, setting new standards for financial reporting that public entities, management, and accounting firms to obey by. Sox put accountability on management to now certify the accuracy of their financial statements, information provided to the public, and increase penalties for fraudulent financial acts. Also, increase the independence between outside auditors who review financials for firms and increased oversight of Board …show more content…
The maintenance of internal control by management ensures that material information is not being provided for reports. This is essential when being assessed by our side auditors in compliance with Section 404 of Sox. It requires top management or audit committee and outside auditors to review on internal controls and whether or not they are adequate enough. This can be costly for entities to implement because samples of documentation, testing of internal controls, review of manual, and automated systems implemented by entity which enormous maintenance and time. Assessing internal control is design efficiency, outside auditors relate to specific accounts and relevant information in context of material mistake can prevent fraudulent financials being provided to the …show more content…
During Enron’s bankruptcy, investigators and auditors brought attention to off-balance-sheet instruments being used, which moved assets and debt from the off-balance sheet to make financials reports more lucrative and look like great opportunity for potential investors. According to "The Sarbanes-Oxley Act Of 2002" (2006), “Requires the disclosure of all material off-balance sheet items.” The Sox requiring disclosure of materials from off-balance-sheet items lets potential investors review financials more adequately and in-depth to prevent entities misleading investors. Which leads to section 409 stating, “ Issuers are required to disclose to public, on urgent basis, information on material changes to the financial conditions or operations. These disclosures are to be presented in a term that are easily to understand supported by trends and qualitative information of both graphics presentation as appropriate.” ("The Sarbanes-Oxley Act Of 2002", 2006) This ensures for example, that an entity must disclose any change such as moving from cash basis to accrual