Sarbanes-Oxley Act Cons

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The Sarbanes- Oxley Act is an act that came into affect July 29, 2002. The act was sponsored by Paul Sarbanes, senator for the state of Maryland, and Michael Oxley a representative from the state of Ohio. The act goes by the term SOX, it is a federal law that enhanced the standards for the public trading board and accounting and management firms. Some firms may also recognize the act as ‘Public Company Accounting Reform and Investor Protection Act’ or the ‘Corporate and Auditing Accountability and Responsibility Act’. The act is into place because of the scandals that happened with corporate America. The act has eleven titles that break down different rules and policies as guidelines that is mandatory that these corporations follow. Many…show more content…
Before 2002, this was never done and that is what lead to a lot of these big corporations downfall. After SOX became in affect, it made it almost impossible for officers of these major corporations to “play stupid”. They require, not the company but the law now requires the officers not to just believe that someone else has completed the financial records, but they have to know for sure that everything has been done correctly, they have to sign off on all of the financial paperwork. The law also mandates that any stock holders in the corporation have rights to have the auditors come in and conduct there own financial statements and conduct audits as well. The SOX act is governed by eleven titles that make up the rules and guidelines and some are considered to be more important than the other. They are as follows: 1. Public Company Accounting Oversight Board- this title consists of nine sections and it states that auditors are to be assigned by the board to make sure the corporation is within compliance on all levels with…show more content…
Enhanced Financial Disclosures- this title has eight sections in which it is stating that all documents have to be reported as well as being audited. It also states that if anything has ever changed in the material that was submitted it will be reviewed by the SEC. 5. Analyst Conflicts of Interest-this is very simple- it only comes with one section, it is basically just made to help regain confidence the investors when reporting security analasyst. 6. Commission Resources and Authority- this inhibits the SEC authority to sensor or bar security, or watch them from being banned and losing liscense as a broker. 7. Studies and Reports- this title has 5 sections. This title requires that the SEC to look for new findings and report them. 8. Corporate and Criminal Fraud- this basically just breaks down all of the punishment for all of the officers who do not comply with the act. 9. White Collar Crime Pentalty- there job is increasing the federal criminal policies. 10. Corporate Tax Returns: States the CEO has to sign the tax returns. 11. Corporate Fraud Accountability- this just identified fraud and officers that are tampering things that could hurt them in

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