Poor governance, insufficient disclosure practices, and a lack of satisfactory internal controls were the major problems of the corporate sector in the beginning of the twenty first century (Bergen, 2005). The 2001-2002 Enron and WorldCom scandals have proved beyond doubt that…
Sarbanes-Oxley Act 2002 was one such measure intended to set standards to guarantee the accuracy of financial reports published by organizations irrespective of big or small. This paper briefly explains the impacts of Sarbanes-Oxley Act 2002 on accounting profession.
Section 404 of the Sarbanes-Oxley Act 2002 (SOX) mandates creation of an internal control structure, and assessment of its effectiveness. This control structure involves controls on internal financing reporting and auditing (Bergen, 2005). Many companies have reported that the introduction of SOX and the increased internal control structure was more expensive than anticipated. The external costs have been increased a lot for many companies because of SOX and this increase especially at in a period of recession was too difficult for the companies to handle. At the same time, most of the costs needed to strengthen the internal control were one-time expenses only and the corporate and the investor public would be beneficial from that in the long run.
Section 409 of SOX mandates that a company must disclose to the public any information that is of material value that affects the organizations financial condition or operations. This section was a real challenge for the accounting professionals since most of the companies used Excel spreadsheets for keeping much of their financial data and linking these data in a timely manner with the financial reporting systems were too much difficult. The non compatibility of ordinary Excel spreadsheets with the other financial reporting systems forced the companies to change their accounting software to the much advanced and expensive software like SAP and Oracle or to incorporate new technologies such as off the shelf applications and spreadsheet templates with macros to convert data into a format that can be readily integrated into the organization’s financial reporting system (Jyoti, 2005).
Earlier some of ...
Cite this document
(“The effects of Sarbanes-Oxley Act 2002 on the accounting profession Research Paper”, n.d.)
Retrieved from https://studentshare.net/miscellaneous/386224-the-effects-of-sarbanes-oxley-act-2002-on-the-accounting-profession
(The Effects of Sarbanes-Oxley Act 2002 on the Accounting Profession Research Paper)
“The Effects of Sarbanes-Oxley Act 2002 on the Accounting Profession Research Paper”, n.d. https://studentshare.net/miscellaneous/386224-the-effects-of-sarbanes-oxley-act-2002-on-the-accounting-profession.
It is the system by which companies are directed and controlled in the interests of shareholders and other stakeholders. These major collapses caused a great concern for shareholders and investors around the globe resulting in a huge decrease in the confidence of both the shareholders as well as the investors.
In the US Senate, the Sarbanes Oxley Act is commonly referred to as the Public Company Accounting Reform and Investor Protection Act (Shakespeare 333). In the House, the act is commonly referred to as the Corporate and Auditing Accounting and Responsibility Act.
To address to such major collapses and other issues, the U.S came up with Sarbanes-Oxley Act. It is more of a Rules-Based approach where non-compliance would lead to heavy penalties. The Sarbanes-Oxley Act looks upon many
With the advent of the Sarbanes – Oxley Act, information regarding every aspect of the business conducted by a company that influences financial performance has to be reported. This is in addition to the financial data
It also emphasized on the qualification of the audit committee and the time taken to disclose financial information regarding a firm. This in the long run was to provide more information to investors and shareholders and allow them to invest
Some of these regulatory requirements such as state filing and fair lending laws are some of the commonly known compliance requirements that majority of businesses can relate with, having been in operation for
4 Pages(1000 words)Research Paper
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Research Paper on topic The effects of Sarbanes-Oxley Act 2002 on the accounting profession for FREE!