What Is The Sarbanes-Oxley Act
Sarbanes-Oxley Act
Brandie Cortinas
ENGL 145(D-21)
5-12-14
Ms. Vivian
Abstract
The act enacted in response to financial problems to protect the public from accounting errors and fraud. The act does not specify how a business should store their records; rather, it defines which records are to be stored and for how long they’re going to be stored. The act affects the financial corporations and the IT department. All business records must be saved for more than five years. The consequences for not following the rules are fines, imprisonment, or both. There are several sections to the Sarbanes-Oxley Act that describes the establishment, registration, auditing, quality control, rules, investigations
and the disciplinary proceedings.
Sarbanes Oxley Act is focused towards identifying accounting frauds in different public companies. This paper discusses about various reasons for the introduction of Sarbanes Oxley Act and causes that has been overlooked. Sarbanes Oxley Act is a US federal law, which is established in order to set out the some standards for accounting firms, public company boards and management. These standards are established in order to overcome the problem of accounting scandals. Companies such as Enron and WorldCom have created major accounting scandals. Sarbanes Oxley Act protects the investors from the accounting scandals and frauds created by corporations. It has also introduced provision for the improvement in intertnal auditing of the firm. In addition to his financial reporting control mechanism has also enhanced, which helps in detecting the fraud easily. It has been analyzed that auditors are not able to detect the frauds easily. Manipulations in the financial records are not identified by the auditors and they rely on the false information within the financial statement. It has been analyzed that SOX eliminate the conflict of interest by threatening the auditing firm for the the non auditing business created by the auditors. It has been analyzed that Sarbanes Oxley Act helps in identifying the person who is individually responsible for the fraud. Earlier court is not able to identify the exact person, who is responsible for committing the crime. Sarbanes Oxley Act requires a test of the concern person regarding the accuracy of financial statement. It has been analyzed that frauds created by many big companies such as Enron, WorldCom, etc. has arises the need of Sarbanes Oxley Act.
Brandie Cortinas
ENGL 145(D-21)
5-12-14
Ms. Vivian
Abstract
The act enacted in response to financial problems to protect the public from accounting errors and fraud. The act does not specify how a business should store their records; rather, it defines which records are to be stored and for how long they’re going to be stored. The act affects the financial corporations and the IT department. All business records must be saved for more than five years. The consequences for not following the rules are fines, imprisonment, or both. There are several sections to the Sarbanes-Oxley Act that describes the establishment, registration, auditing, quality control, rules, investigations
and the disciplinary proceedings.
Sarbanes Oxley Act is focused towards identifying accounting frauds in different public companies. This paper discusses about various reasons for the introduction of Sarbanes Oxley Act and causes that has been overlooked. Sarbanes Oxley Act is a US federal law, which is established in order to set out the some standards for accounting firms, public company boards and management. These standards are established in order to overcome the problem of accounting scandals. Companies such as Enron and WorldCom have created major accounting scandals. Sarbanes Oxley Act protects the investors from the accounting scandals and frauds created by corporations. It has also introduced provision for the improvement in intertnal auditing of the firm. In addition to his financial reporting control mechanism has also enhanced, which helps in detecting the fraud easily. It has been analyzed that auditors are not able to detect the frauds easily. Manipulations in the financial records are not identified by the auditors and they rely on the false information within the financial statement. It has been analyzed that SOX eliminate the conflict of interest by threatening the auditing firm for the the non auditing business created by the auditors. It has been analyzed that Sarbanes Oxley Act helps in identifying the person who is individually responsible for the fraud. Earlier court is not able to identify the exact person, who is responsible for committing the crime. Sarbanes Oxley Act requires a test of the concern person regarding the accuracy of financial statement. It has been analyzed that frauds created by many big companies such as Enron, WorldCom, etc. has arises the need of Sarbanes Oxley Act.