Law 421 Sypnosis Essay

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MEMORANDUM
UNIVERSITY OF PHOENIX

DATE:
TO:
FROM:
RE:         Why was the Sarbanes-Oxley Act of 2002 created and how does it impact financial
              reporting today?
              Hooper, C. (2010). Why was the sarbanes-oxley act of 2002 created and how does it
              Impact financial reporting today? Retrieved from
              http://www.charleshooper.net/blog/why-was-the-sarbanes-oxley-act-of-2002-created-
              and-how-does-it-impact-financial-reporting-today/

ARTICLE SYNOPSIS

      The Sarbanes-Oxley Act (SOX) was passed by Congress in 2002. The SOX Act affected the responsibilities of auditors, boards of directors, and corporate managers with respect to financial reporting. The Act also established the Public Companies Accounting Oversight Board (PCAOB) that is now responsible for oversight of financial statement audits of publicly-traded corporations and the establishment of auditing standards in the U.S. The primary purpose of SOX was to increase investor confidence in the financial reports provided by corporations. The SOX Act of 2002 has had profound effects on financial accounting and auditing practices. Some practices of the SOX Act and related regulations are still being implemented, and there will undoubtedly be revisions and additions to some of these provisions. The extent to which these provisions are successful in increasing the reliability of financial reporting remains to be seen. However, there is no question that the way that boards of directors, corporate managers, and external auditors approach their responsibilities has changed and greater efforts are being made to ensure that timely and accurate financial information is provided to investors.

LEGAL ISSUE

      The SOX act was implemented after the recent collapse of corporations such as Enron and Adelphia in which falsified and inaccurate financial statements led to their...

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