Key Components and Primary Objectives of the Act: The basic matters identified and revised in the act included the creation of regulatory board to oversee the activities of the public accounting audit firms, revised standards for auditor’s independence and audit committee, requirement of certification of the SEC’s reports by the executives of the public companies, restricts the rules to prevent insider dealings by the directors and executives, increase in the liability for the non-compliance to the federal securities laws and imposes additional responsibility of the attorney to report non compliance and conflict of interests. (Lipman & Lipman. 2006) 1. Establishment of Public Company Oversight Board: Sarbanes Oxley Act established the Public Company Accounting Oversight Board to oversee the audits of the public listed companies. It was established to regulate the activities of the auditing firms including the issues of quality control, ethics and independence of auditors. The aim for its establishment was to increase the confidence of investors and general public. 2. Auditor’s Independence: It focused on strengthening the auditor’s independence by prohibiting the provision of non-audit services (book keeping, internal audit, management, HR functions etc.) to the public companies by the external auditors, mandating the rotation of audit partners on a five year basis and rotation of registered public accounting firms and ensuring no ethical issue arises between the external auditors and the company such as conflict of interest. 3. Enhanced Corporate Governance Requirements: The corporate governance requirements were enhanced in many areas which included the role of audit committee which nave been responsible for the appointment, compensation and oversight of the work of external auditors, who are required to directly report to the audit committee. Further the audit committee should be made up of independent non- executive directors. Sarbanes Oxley Act further prohibits the maintenance of any credit or loan or extension of the same to directors or executives of the public companies. The Act even requires the executives such as CEO and the CFO of every public company to certify in each annual and quarterly report to the SEC that the reports have been reviewed and make the representation of the effectiveness of controls specified. 4. Enhanced Disclosure Requirements: Sarbanes Oxley Act enhances the disclosure requirements for the public companies which included increased reporting on the effectiveness of internal controls and financial reporting procedures, disclosures on codes of ethics and explanations in case of non-compliance and disclosures about the transactions by the directors, management and other stakeholders that can cause security concerns. 5. Commission Resources and Enhanced Authority: In order for the SEC to work effectively, provision of additional funding was ensured. Apart from that more power and authority was given to SEC and federal courts to be exercised on companies and individuals where prohibitions are required. It requires the federal regulatory bodies to conduct researches and make reports about the credit rating agencies, roles of investment banks and financial advisors, consolidation of accounting firms and some other matters etc. 6. Enhanced Accountability: The Act strict the rules and regulations and imposes stricter and larger penalties regarding the breach of law, exercising improper
Sarbanes-Oxley Act of 2002 and number Date submitted Sarbanes-Oxley Act of 2002 Introduction: Sarbanes Oxley Act was signed into law by President George W Bush, which is a revised version of federal securities law for public companies…
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. The report also examines as to why these new standards are required and necessary.
Asset valuation greatly affects the efficacy of auditing as asset statement constitutes a major part of financial reports. Auditors confront with this issue when company or person fails to present enough evidence to support specific claims. Sometimes, auditors may not deeply examine information that a filer has included.
The Enron scandal which disclosed in October 2001, led to the bankruptcy of the Enron Corporation. Enron Corporation was an American energy company which was established in Houston, Texas. This also led to the dissolution of one of world’s fifth largest audit and accountancy partnerships known as Arthur Andersen.
It was first initiated in 1963 to establish a research program. It was then expanded in 1967 and amended in 1970 and 1977 to include regulatory measures for both mobile and stationary causes of air pollution (Jacobson 1). A final amendment was made in 1990 to address acid rain, toxic air pollution and the ozone depletion.
tions of the act on the airline industry. The act was passed as an aftermath of 9/11 attacks. It first provides the new airport security provisions which have been made under the act such as increased passenger screening, federalized baggage screening no fly lists and the secure flight program of the TSA.
This law derives its name from its sponsors, the then United States Senator Paul Sarbanes and Representative Michael Garver Oxley. Because of this, this Act is sometimes informally referred to as SOX or Sarbox. The Sarbanes-Oxley Act of 2002 sought to set enhanced standards for all American public company management, boards and accounting firms.
Act gave liberty-seeking Americans the springboard on which to organize violent protest which ultimately led to serious Revolution about their high-handed colonist. This paper critically looks at all the factors leading to the enactment of Stamp Act, its dangerous aftermaths and
Accounting ethics is a very important ethical practice for preventing corporate collapses. Accounting ethics has significant importance for different stakeholders related with any organization. It is being noticed that different corporate collapses and recent accounting malpractices has increased the importance of accounting ethics.
15 pages (3750 words)Term Paper
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