Sarbanes Oxley Essay

4997 WordsMay 18, 201420 Pages
Sarbanes-Oxley Act Jim Shea Ottawa University Robert Meehan October 16, 2012 Sarbanes-Oxley Act The Sarbanes-Oxley Act was passed in 2002 after a number of corporate scandals including Tyco International, WorldCom, and most notably, Enron. While this legislation does not apply to private firms, it is important information for entrepreneurs to know what Sarbanes-Oxley is. Faulty accounting practices and dishonest business procedures robbed the public of its trust in corporate America and cost the economy thousands of jobs. We will talk about the Executive Compensation Trends such as: Stock Options, Cash Incentives and "Perqs". Then we will discuss how it ties to the Sarbanes Oxley Act. Public dismay grew into outrage and soon the executive officers of these companies were summoned before congress to testify about their involvement in the illegal business activities which robbed shareholders of billions of dollars. These companies performed a number of dishonest and unlawful actions in order to falsely manipulate their stock price, hide their losses and project a façade of profitability, and cover up insider trading and options granted to executives. The Sarbanes-Oxley Act was intended to protect the interest of those who invest in publicly traded companies by improving the reliability and accuracy of corporate financial reports and disclosures (Garrison, Noreen & Brewer, 2010). What is the Sarbanes-Oxley Act? The Sarbanes-Oxley Act was signed into law on 30 July 2002 by President Bush. The Act is designed to oversee the financial reporting landscape for finance professionals. Its purpose is to review legislative audit requirements and to protect investors by improving the accuracy and reliability of corporate disclosures. The act covers issues such as establishing a public company accounting oversight board, auditor

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