The Impact of the Sarbanes-Oxley Act on Auditing

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The Impact of the Sarbanes-Oxley Act on Auditing Introduction The Sarbanes-Oxley Act of 2002, also known as the Public Company Accounting Reform and Investor Protection Act of 2002, has literally changed the landscape of the accounting world. This single piece of legislation has had the biggest impact on accounting profession, including auditing, since the passage of The Securities Act of 1933 and The Securities Exchange Act of 1934. The Sarbanes-Oxley Act of 2002 (herein referred to as SOX, or Sarbanes-Oxley), resulted from large accounting scandals such as Enron, WorldCom, AIG, and others. The purpose of this act was to restore public confidence in public accounting and promote better ethical business practices through increased executive awareness and accountability. SOX instituted major changes to the regulation of financial practice and corporate governance. Of the key components of SOX, section 404 has gained the most attention and requires public company auditors to attest to the effectiveness of internal controls and fair presentation of financial statements, in all material respects. The Sarbanes-Oxley Act has greatly impacted the auditing landscape; however, how has it specifically impacted the Banking sector? What are the civil and legal issues and consequences for the auditing profession prior to and subsequent the Sarbanes Oxley Act? How has the Sarbanes-Oxley Act impacted accountants, auditors, and stakeholders of financial institutions? What general impact has Sarbanes-Oxley had on the auditing process as a whole? This paper will attempt to address these questions in an effort to gain a greater understanding on The Sarbanes-Oxley Act of 2002 and its implications. How has Sarbanes-Oxley impacted the Banking sector? Commercial banking has traditionally been a highly regulated industry. The Federal Deposit Insurance Corporation

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