Essay On The Sarbanes Oxley Act

814 Words4 Pages
Sarbanes Oxley The Sarbanes-Oxley act is a United States federal law. This law was created to improve reliability and accuracy of financial documents. The official law is known as the Public Company Accounting Reform and Protection Act in the Senate and Corporate and Auditing Accountability and Responsibility Act in the House. It was passed into law on July 30, 2002. The ultimate goal is to protect investors. Reason Many acts of corporate corruption in the 1990s and early 2000s brought on this regulation. There were many loopholes that allowed for accounting errors without any legal incentive to correct the problem. Due to the accounting practices at companies such as Enron, Tyco, and WorldCom investors lost billions. The accounting practices created a scandal in which the companies were able to hide information from investors. This allowed the stock prices to remain high even when the company was struggling. When the companies collapsed, investors became worried about the overall securities markets. The Sarbanes-Oxley act is a response to the corruption with the attempt to improve business accounting regulations. The act is considered the most extensive increase in regulations since the Security and Exchange Act of 1934. This is done through the regulation of businesses to prevent…show more content…
Crimes such as there are always unacceptable do to the creation of uncertainty in the markets. The fear is bad for business in the United States and in the world as a whole. Many investors’ lost substantial amounts of money due to the scandals. The Sarbanes-Oxley now places a tighter regulation and control on the reporting of a company’s financial reports while holding those within the company accountable with criminal charges. With all the modifications and changes that are now being enforces, business investments into public companies in the United States is

More about Essay On The Sarbanes Oxley Act

Open Document