WK 2 Individual Assignment ACC 561 Sarbanes Oxley Act Larry Fuller

Topics: Enron, Internal control, Auditing Pages: 4 (628 words) Published: July 19, 2015


Sarbanes-Oxley Act of 2002
ACC/561
December 02, 2013
Reza Rafi

Sarbanes-Oxley Act of 2002
Fraudulent accounting activity was the basis for the Sarbanes Oxley Act. Several companies “cooked the books” when it came to their financial records. Unfortunately, this caused investors to believe the company was doing better than indicated. Of course unaware investors and even retirement plans were put into these companies. Eventually, this caught up with the firm as the information was leaked out and the value of the stock immediately plummeted. This of course made individuals reconsider the attractiveness of investing in the stock market. The fear of this happening in the future was just too much to take even for high returns because these returns could also turn out to be faulty. Therefore something had to be done in order to restore the public’s faith in the stock market and start investing again. This is how the Sarbanes Oxley Act came about. Now, the question that is posed for this paper is will this act stop fraud from occurring in the future? To answer this question, we must consider a few things. When you were younger and your parents told you not to eat a cookie before dinner, did that stop you from eating that cookie? The probably answer is that you still tried to sneak a cookie when they weren’t looking. Therefore, it’s reasonable to assume that even though there is a law that prevents companies from inaccurately reporting their financial documents, that someone may violate this. The important part here is that it will reduce the fraudulent activity even though it cannot guarantee that it will be eliminated completely. This act is pretty successful at reducing the amount of fraudulent activity. I say this from personal experience as I applied to work as an auditor with a local firm. Although I didn’t get the position, I was able to talk to them extensively about what they do. If hired, I would have been...
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