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Enron and SOX:The absence of transparency and accuracy leading to the Enron - Essay Example

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Masters
Essay
Finance & Accounting
Pages 6 (1506 words)

Summary

The controversy involving powerful institutions has made an immense impact in the corporate world leading to their downfall and the implementation of stringent laws of the government.Enron and Arthur Andersen faced the collapse of their careers which affected the industry and the birth of the Sarbanes-Oxley Act…

Extract of sample
Enron and SOX:The absence of transparency and accuracy leading to the Enron

The controversy involving powerful institutions has made an immense impact in the corporate world leading to their downfall and the implementation of stringent laws of the government.Enron and Arthur Andersen faced the collapse of their careers which affected the industry and the birth of the Sarbanes-Oxley Act.The largest bankruptcy in history marked the existence of fraudulent accounting procedures by Enron and Arthur Andersen in 2001. The once blue chip stock ended up to be valued for small meager amounts. Debts resulted from unreported transactions in their financial statements by the company with their restricted partnerships and alliances.The Sarbanes-Oxley Act of 2002 or also known as SOX is law promulgated as government's response to Enron and Arthur Andersen financial controversy which aims to ensure the safety and security of company shareholders against fraudulent and unauthorized accounting procedures which disables them from rightfully knowing the truth with their stocks and properties.
The law is implemented and monitored by the (SEC), which gives the timeframes for compliance and dissemination of information regarding the requirements. Sarbanes-Oxley is not a set of business practices and does not specify how a business should store records; rather, it defines which records are to be stored and for how long.
The consequences for non-compliance are fines, imprisonment, or both. ...
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