The Sarbanes Oxley Act ( Sox ) - 1728 Words

In 2002 the telecommunication company, WorldCom committed one of the biggest accounting scandals of all time. They perpetrated over *1 $3.8 billion in fraud, leading to a loss of 30,000 jobs and $180 billion losses for investors . This is one of the several accounting scandals that led to the passing of Sarbanes-Oxley Act, which introduced the most comprehensive set of new business regulations since the 1930’s. The Sarbanes-Oxley Act (SOX) is an act that was passed by United States Congress in 2002. This act safeguarded investors from the likelihood of fraudulent accounting practices of publicly traded organizations by authorizing strict reforms to advance financial disclosures and prevent accounting frauds. With SOX being an extremely important piece of legislature it is necessary to understand the reasons why SOX was passed, how it was passed, what it entails, the aftermath of the act. To understand the events that lead to SOX passing it is imperative to grasp the bus iness regulations that existed and allowed these accounting scandals to occur. This lenient regulatory environment was a precursor to the accounting scandals that occurred in the early 2000’s. Prior to SOX there was the Securities and Exchange Act of 1934. It created the Securities and Exchange Commission which supervises all publicly traded companies. This act also was created to regulate commerce in stocks, bonds, and other securities. It also required public companies to provide complexShow MoreRelatedThe 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 ( Sox )943 Words   |  4 PagesThe Sarbanes-Oxley Act (SOX) was passed by Congress in 2002, and is administered by the SEC. The SEC checks for compliance and creates rules and requirements. The Act was created to restore investor confidence in financial statements after major accounting frauds, such as Enron, Tyco, and WorldCom. In addition, SOX aimed to prevent future accounting fraud through improving the accuracy of disclosures and through increasing corporate governance, accountability, and reliability. Major Provisions TheRead MoreThe Sarbanes Oxley Act ( Sox )2238 Words   |  9 Pages The Sarbanes-Oxley Act. An act passed by U.S. Congress in 2002 to protect investors and the general public from the possibility of accounting errors and fraudulent practices by corporations. The Sarbanes-Oxley Act (SOX), named after U.S. Senator Paul Sarbanes and U.S. Representative Michael G. Oxley, which contains eleven sections, mandated strict reforms to improve financial disclosures and prevent accounting fraud. The eleven sections of the bill cover responsibilities of a public corporation’sRead MoreThe Sarbanes Oxley ( Sox ) Act1995 Words   |  8 PagesThe Sarbanes-Oxley (SOX) Act was passed by Congress in 2002 to address issues in auditing, corporate governance and capital markets that Congress believed existed. These deficiencies let to several cases of accounting irregularities and securities fraud. According to the Student Guide to the Sarbanes-Oxley Act many changes were made to securities law. A new federal agency was created, the entire accounting industry was r estructured, Wall Street practices were reformed, corporate governance proceduresRead MoreThe Sarbanes Oxley Act ( Sox )1202 Words   |  5 PagesBrief historical summary on SOX enactment The Sarbanes Oxley Act (SOX) was sanctioned in July 2002 with the objective of reestablishing public trust in the markets. SOX was promised as one of the opportunities for cultivating organizational ethics by clearly outlining the code of ethics. This included the raise of truthful and strong ethical behavior. SOX moreover, demands that corporate organizations to release codes applicable to the senior financial officer. Indorsing whistle blowing in theRead MoreThe Sarbanes Oxley Act ( Sox )955 Words   |  4 PagesErnestas Zarskis BUS 5644 International Accounting and Reporting Paper #2 Dr. LuAnn Bean 1. Based on the video Bigger Than Enron, discuss at least five features of the Sarbanes-Oxley Act (SOX) that are the result of events related to corporate fraud. Under Section 302 signing officer should be familiar with the report and are responsible for internal controls and have evaluated these internal controls within the previous ninety days and have reported on their findings. Also, report should notRead MoreThe Sarbanes Oxley Act ( Sox ) Essay1609 Words   |  7 Pagesmalpractices across several companies in the United States such as Enrol Corporation, Tyco International and WorldCom, there has been a lot of attention with regards to the accounting practices in the corporate sector. Specifically, the Sarbanes – Oxley Act (SOX) which was passed by congress in 2002, was aimed at addressing the situation by regulating fraudulent accounting practices such as bribery and wrong entries in books (Williams Elson, 2010). While regulation has its own limits, it is hopedRead MoreThe Sarbanes Oxley Act ( Sox )969 Words   |  4 PagesU.S. Congress passed the Sarbanes-Oxley Act of 2002 (SOX), a legislation put in place not only to improve the accuracy of corporate disclosures, but also to protect shareholders and the general public from accounting errors and fraudulent practices in all organizations. Although these organizations include corporations, small businesses, non-profit institutions, government bodies and any other entity where business is conducted, according to Accounting in Business, the Act was mostly enacted to â€Å"toRead MoreThe Sarbanes Oxley Act ( Sox ) Essay1233 Words   |  5 Pagescompanies such as Enron and WorldCom in the turn of the century motivated Congress to pass the Sarbanes-Oxley Act (SOX) in 2002 to strengthen regulations within the accounting profession (Whittington Pany, 2014). As a result, the SOX introduced provisions that changed the accounting function, such as the establishment of the Public Company Accounting Oversight Board (PCAOB) and other major elements; however, the SOX regulations subsequently resulted in consequences to its compliance. In the United StatesRead MoreThe Sarbanes Oxley Act ( Sox )1526 Words   |  7 PagesEssay #1- Tax Advantages and Disadvantages of Sarbanes-Oxley Eric Kitts Liberty University â€Æ' Introduction The Sarbanes-Oxley Act (SOX) of 2002 was implemented to deter fraudulent activities amongst companies by monitoring and auditing financial activities as well as set up internal controls to aid in the safeguard of company funds and investor’s interest. SOX also regulates the non-audit tax services (NATS) that can be performed by an auditing firm. SOX was passed by Congress in 2002 in an attempt