The Sarbanes Oxley Act Controversy - 1844 Words

The Sarbanes-Oxley Act arose as a result of several corporate accounting scandals that became public in late 2001 and early 2002. These scandals involved many publicly traded companies such as Enron, which â€Å"boosted profits and hid debts totaling over $1 billion by improperly using off-the-books partnerships†; WorldCom, which â€Å"overstated its cash flow by booking $3.8 billion in operating expenses as capital expenses and gave founder Bernard Ebbers $400 million in off-the-books loans†; and Xerox, which â€Å"falsified financial results for five years, boosting income by $1.5 billion†, among a long list of others (Patsuris, 2002). In the book Revolutionary Wealth, Alvin and Heidi Toffler (2006) explain that â€Å"slowly changing regulatory and†¦show more content†¦Regulation and Enforcement The Sarbanes-Oxley Act consists of 11 titles that set significant requirements and consequences for non-compliance in terms of transparency of financial repor ting and accountability of leadership for publicly held companies. The Act established the Public Company Accounting Oversight Board (PCAOB), which is an independent, nongovernmental and non-profit organization created to oversee the audits of public companies. The Act also set requirements for the audit committee, the CEO and CFO in regards to certifying financial statements, prohibits loans to executive officers, require real-time disclosure of information, changed the deadline for insiders to report trading in company s securities to within two business days of the transaction, provides for the protection of whistleblowers, and imposes sanctions and penalties on violators of the provisions of the Act (â€Å"Corporate scandals, the Sarbanes-Oxley Act of 2002 and equity prices,† 2007, p. 83). All of these provisions are used to help improve accuracy and reliability of corporate disclosures by ensuring transparency, neutrality, and accountability in reporting financials, in order to protect investors. The Sarbanes-Oxley Act has manyShow MoreRelatedThe Sarbanes Oxley Act Of 20021525 Words   |  7 Pagesthe Sarbanes-Oxley Act of 2002 (Cheeseman, 2013). Congress ordered the Sarbanes-Oxley Act of 2002 (SOX Act) to shield customers from the fraudulent exercises of significant partnerships. This paper will give a brief history of the SOX Act, portray how it will shield general society from fraud inside of partnerships, and give a presumption to the viability of the capacity of the demonstration to shield purchasers from future frauds. History of the SOX Act Congress established the Sarbanes-Oxley ActRead MoreSarbanes Oxley Outline676 Words   |  3 PagesThe Ineffectiveness of the Sarbanes Oxley Act In Corporate Management and Accounting In the early 1990s, a young company named Enron was quickly moving up Fortune magazine’s chart of â€Å"America’s Most Innovative Company.† As the corporate world began to herald Enron as the next global leader in business, a dark secret loomed on the horizon of this great energy company. Aggressive entrepreneurs eager to push the company’s stock price higher and a series of fraudulent accounting procedures involvingRead MoreSarbanes Oxley Act1322 Words   |  6 PagesSarbanes-Oxley Act The Sarbanes-Oxley is a U.S. federal law that has generated much controversy, and involved the response to the financial scandals of some large corporations such as Enron, Tyco International, WorldCom and Peregrine Systems. These scandals brought down the public confidence in auditing and accounting firms. The law is named after Senator Paul Sarbanes Democratic Party and GOP Congressman Michael G. Oxley. It was passed by large majorities in both Congress and the Senate and coversRead MoreSarbanes Oxley Act And Its Effect On Businesses1542 Words   |  7 Pagesthe Sarbanes-Oxley Act. In 2002 the Sarbanes-Oxley Act passed by the U.S. Congress to protect shareholders and the general public from accounting errors and fraudulent practices in the enterprise, as well as improve the accuracy of corporate disclosures. With the research I have done I believe that with the act being accepted and pass made a big change for all organizations, large and small. Keywords: U.S Congress, Organizations,Research, Sarbanes-Oxley, Accounting the Sarbanes-OxleyRead MoreThe Sarbanes Oxley Act ( Sox )1604 Words   |  7 Pagesthe company. Thus, to respond to the public pressure over acts of corporate offense, the Sarbanes-Oxley Act (SOX) was enacted in 2002. SOX proposed major changes to the regulation of corporate governance and financial reporting by improving the accuracy and reliability of company disclosure. This essay will explain the effects of SOX on the financial statement fraud in an organization. Situation Prior to the legislation of Sarbanes-Oxley Act, the regulations of financial statement were much more laxRead MoreThe Sarbanes Oxley Act Of 20021274 Words   |  6 Pagesare the Sarbanes-Oxley Act of 2002 and the recently approved by Congress act, the Dodd-Frank Wall Street reform and Consumer Protection of 2010. While these acts have been implemented with the economy and the consumer in mind, there have been a lot of controversy on whether these acts have in fact benefitted the economy or not. We will analyze and explain the two before mentioned acts and will provide an overview of the point of view of supporters and the opposition. The Sarbanes-Oxley Act of 2002Read MoreCase Study of NYSE1328 Words   |  5 Pagesthe payment of former NYSE chairman Richard (Dick) Grasso. As many as 45 former directors and former employees were subpoenaed over possible violations of NYSE regulations or other regulations that dealt with accountability of an organization. Controversy over Grassos pay had started the previous year when revelations regarding the hugeness of his pay sparked media and public outrage. Grassos annual pay was disclosed to include $1.4 million in salary plus a nonguaranteed bonus of approximatelyRead MoreThe Public Company Accounting Oversight Board1193 Words   |  5 PagesThe Sarbanes-Oxley Act created the Public Company Accounting Oversight Board (PCAOB) to assume the responsibility of overseeing the auditors of public companies. The PCAOB is a private-sector, non-profit corporation. It was established to protect the interests of investors and further the public interests in the preparation of informative, fair, and independent audit reports. (The PCAOB) Although the PCAOB is a private sector organization, it has many government-like regulatory functions. The PCAOBRead MoreResearching Topics Of Interest Is A Key Starting Point For The Research Effort1538 Words   |  7 Pagesrevenue recognition, FASB ASC 805-10, Business Combinations, applicable to creative acquisition accounting, and †¢ IAS No. 36, Impairment of Assets, applicable to big bath charges and cookie jar reserves. Other key applicable rules areas include Sarbanes Oxley, Dodd Frank, and the SEC rules for publicly traded companies. An Examination into the Effects of Fraud Relative to Financial Statements, Corporate Image, and Prevention Methods Utilizing Emerging Information Technology Tools The second topic areaRead MoreThe Sarbanes Oxley Act Of 20022042 Words   |  9 PagesIntroduction The Sarbanes-Oxley Act of 2002 (SOX) was enacted on July 30, 2002 as a result of a series of corporate fraud scandals that shook the world and devastated investor confidence. Expand History of the Act The Sarbanes-Oxley Act was enacted primarily to address a multitude of corporate scandals. The largest and most infamous scandal was from an energy company named Enron. Enron was the 7th largest company in 2001 and by the end of 2002 it was bankrupt. The company was found to be falsifying