ACC 561 Week 2 Individual Assignment Sarbanes Oxley Act Of 2002

Topics: Auditing, Enron, Audit Pages: 7 (1422 words) Published: March 25, 2015
Sarbanes–Oxley, Sarbox or SOX, is a United States federal law which was introduced in 2002. It is also known as the “Public Company Accounting Reform and Investor Protection Act” and “and 'Corporate and Auditing Accountability and Responsibility Act”. The main objective of the act is to protect investors by improving the accuracy and reliability of corporate disclosures. New aspects are created by SOX act for corporate accountability as well as new penalties for wrong doings. It was basically introduced after major corporate and accounting scandals including the scandals of Enron, WorldCom etc so that the same kind of scandals do not repeat again. There are 11 titles on the act. Each title consists of several sections. The Securities and Exchange Commission needs to implement rulings on the requirements to comply with the law. These major elements are- 1. Public Company Accounting Oversight Board:

This title establishes the Public Company Accounting Oversight Board. It provides specific processes and procedures for compliance audits, policies for control purposes. Basically it provides an oversight of public accounting firms that do auditing. 2. Auditor Independence:

It provides standards for external auditor independence, so that conflicts of interest can be minimized. It also mentions the requirements for appointing new auditor and auditor reporting requirements. Auditing companies are prohibited from providing non-audit services (consulting) for the clients for whom they provide auditing services. 3. Corporate Responsibility:

According to this title the senior executives must take responsibility for accuracy and integrity of their corporate financial reports, otherwise they will be held responsible. This title describes the responsibility of corporate managers, enumerates the limitations and penalties for non compliance. 4. Enhanced Financial Disclosures :

This standard works for improving financial reporting so that there are no misstatements or embellishments of financial reports. It requires the financial executives to report accurately through internal control, appoint auditor to report on those control. It also requires informing public for any deficiencies or changes in financial conditions. 5. Analyst Conflicts of Interest:

This section contains rules which are designed to stimulate greater public confidence in securities research, and to protect the objectivity and independence of securities analysts. 6. Commission Resources and Authority:

This title defines qualifications of associated persons of brokers and dealers and circumstances when a person can be restricted from practicing these activities. It also defines the conditions under which the commission may censure any person, or deny, temporarily. 7. Studies and Reports:

The controller general of USA and the SEC is mandated to perform various studies and report their findings according to this title. It includes the study and report regarding the consolidation of public accounting firm which requires identifying the factors that have led to the consolidation of public accounting firm, the present and future impact of the condition etc. Not only that, there must be studies and reports on violators and violations, investment banks, credit rating agencies, enforcement acts. 8. Corporate and Criminal Fraud Accountability:

This title may be cited as the ‘‘Corporate and Criminal Fraud Accountability Act of 2002’’. It includes sections for criminal penalties for destruction, alteration, or falsification of financial records. Anyone who destroys, mutilates, conceals, covers up any record, document shall be fined under this title, imprisoned not more than 20 years, or both. It also has sections regarding the statute of limitations of fraud and the protection of employees and publicly traded companies who provide evidence of fraud. 9. White Collar Crime Penalty Enhancement:

This title may be called as the...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Sarbanes Oxley Act of 2002 Essay
  • Sarbanes-Oxley Act of 2002 Essay
  • Essay about Sarbanes-Oxley Act of 2002
  • ACC 561 Week 2 Sarbanes Oxley Act Essay
  • Sarbanes Oxley Act 2002 Essay
  • Sarbane-Oxley Act of 2002 Essay
  • Sarbanes-Oxley Act of 2002 Essay
  • Essay about Sarbanes-Oxley Act of 2002

Become a StudyMode Member

Sign Up - It's Free