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Adoption of Sarbanes-Oxley Act of 2002 as an Important Piece of Legislation - Term Paper Example
Author : cummerataeldora
Finance & Accounting
Pages 3 (753 words)
The purpose of this report is to analyze the enhanced standards of accounting for all US public company boards, management and public accounting firms, required by Sarbanes-Oxley Act of 2002…
In the last section the report evaluates the costs and benefits of the changes ushered in by the Sarbanes-Oxley act of 2002. The Sarbanes-Oxley Act of 2002 was drafted by the senator Paul Sarbanes and representative Michael Oxley (SOX-online.com, 2006: Online). The primary objective of the Sarbanes-Oxley Act was to protect and safeguard the interests of the investors by assuring transparency, accuracy and reliability of the financial disclosures made by the corporations. It is a mandatory Act and all the large and small US organizations are required to abide by and follow the provisions and requirements of the Sarbanes-Oxley Act. This Act came into force in the year 2002 and brought in sweeping changes into the area of financial disclosure and corporate governance (Sarbanes-Oxley Act, 2006: Online). The Enhanced Standards Required by Sarbanes-Oxley Act The Sarbanes-Oxley Act not only established new standards of financial accounting and corporate governance but also made provisions for the apt statutory penalties to be imposed in case of any wrongdoing not allowed for and sanctioned by this act. The Act made the corporate accounting system more transparent and responsible by formalizing and assuring the interaction between corporate auditors and corporate boards and executives ...