Lge 500 Week 10 Discussion 1&2 Essay Example
"Underlying Causes" Please respond to the following:
Analyze at least three underlying causes for the creation of the Sarbanes-Oxley Act. Next, rank the causes that you have analyzed from the most important to the least important to the creation of the Act. Explain your rationale.
In the later part of 1990s, there was an epidemic of accounting scandals which arose with the disclosure of financials transgressions by trusted corporate executives. The misdeeds involved misusing or misdirecting funds, understating expenses, overstating the value of corporate assets or underreporting the existence of liabilities, and overstating of revenues.
Some of the companies involved in the creating accounting practice in the late 1990s and early 2000s were Enron, Tyco, Global Crossing, Waste Management, WorldCom, etc. These scandals cost investors billions of dollars due to the collapse of these companies and damaged public confidence in the securities markets.
Congress reacted to the scandals by enacting a bill on July 30th, 2002 known as “Public Company Accounting Reform and investor Protection Act and Corporate and Auditing Accountability and Responsibility Act” also known as Sarbanes-Oxley Act of 2002. The bill was named after the sponsors Senator Paul Sarbanes and U.S Representative Michael Oxley, henceforth the name Sarbanes-Oxley Act. The act was enacted to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws.
The act is made up of 11 sections from more corporate board responsibilities to criminal penalties. Some of the underlying causes for the enactment of the SOX ranked in the order of importance were Public company accounting oversight, lack of independence of public company auditors or conflicts of interest, and weak corporate governance.
First, the accounting industry in 1990s was self-regulated opening the door for creating accounting and corporate financial misreporting. The Big
Analyze at least three underlying causes for the creation of the Sarbanes-Oxley Act. Next, rank the causes that you have analyzed from the most important to the least important to the creation of the Act. Explain your rationale.
In the later part of 1990s, there was an epidemic of accounting scandals which arose with the disclosure of financials transgressions by trusted corporate executives. The misdeeds involved misusing or misdirecting funds, understating expenses, overstating the value of corporate assets or underreporting the existence of liabilities, and overstating of revenues.
Some of the companies involved in the creating accounting practice in the late 1990s and early 2000s were Enron, Tyco, Global Crossing, Waste Management, WorldCom, etc. These scandals cost investors billions of dollars due to the collapse of these companies and damaged public confidence in the securities markets.
Congress reacted to the scandals by enacting a bill on July 30th, 2002 known as “Public Company Accounting Reform and investor Protection Act and Corporate and Auditing Accountability and Responsibility Act” also known as Sarbanes-Oxley Act of 2002. The bill was named after the sponsors Senator Paul Sarbanes and U.S Representative Michael Oxley, henceforth the name Sarbanes-Oxley Act. The act was enacted to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws.
The act is made up of 11 sections from more corporate board responsibilities to criminal penalties. Some of the underlying causes for the enactment of the SOX ranked in the order of importance were Public company accounting oversight, lack of independence of public company auditors or conflicts of interest, and weak corporate governance.
First, the accounting industry in 1990s was self-regulated opening the door for creating accounting and corporate financial misreporting. The Big