Monitoring the Financial and Accounting Standards - Essay Example

However, the 2008 financial crisis proved that any regulation is unable to reduce or control risks.  Additionally, due to the cunning nature of organizations, the Act has been greatly challenged. A good number of companies have refused to go public in order, not to comply with the SOX Act.

SOX is not necessary for companies because it just limits the flexibility of financial management despite the stiff global competition. It also raises costs to organizations in the form of monetary expenses associated with SOX compliance. Since companies are more concerned with public image, they need no strict regulation for them to act ethically. They often have internal controls necessary to maintain the required ethical standards.