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Accounting and Audit Enforcement - Research Paper Example
Author : bridgetkoss
Finance & Accounting
Pages 5 (1255 words)
The SOX act of 2002, an abbreviation of Sarbanes-Oxley Act, is an accountancy law that set new laws and enhanced standards for all public company boards within the United States, its management, as well as the firms in public accountancy…
The other common names of the SOX act are Public Company Accounting Reform and Investor Protection Act or the Corporate and auditing Accountability and Responsibility Act. The SOX act stipulates that the top management of a public company must personally certify the accuracy of the financial information presented to them by the accounting department. This is to ensure that the published results are and fair according to the performance of the company during the fiscal year under scrutiny. In addition to verifying accuracy of financial information, the Act also places severe penalties against any fraudulent financial activities, as well as increasing the independence that external auditors have when they review the corporate financial statements of a company, in addition to increasing the oversight role of the board of directors (Haverkamp, 2009).
The SOX act has a number of provisions which industry players, especially companies in the public sector have to adhere as well as abide to. The first element is the Public Company Accounting Oversight Board (PCAOB). This independent oversight committee of public firms also provides auditing services. The next option is the independence of the auditor from external influence from either the management or the board of directors. This law also demands that companies fulfill their corporate responsibilities such as ensuring accuracy of corporate financial results. ...