What Is The Sarbanes-Oxley Act (SOX)?

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SARBANES-OXLEY Act (SOX) increased the risk and responsibility of chief executive and chief finance officers (officers) of publicly traded companies. SOX increased accountability and visibility of the officers within public companies by broadening the scope of responsibility of adhering to regulations and reporting of fraudulent activities from lawyers to independent auditors of the company. The SOX provisions that directly or indirectly impact officers include, but are not limited to introduction of new and/or enhanced existing requirements: internal controls, disclosure, criminal penalties, and role of audit committee. Also, each measure an officer is responsible for creating or maintaining requires a formal certification and is subsequently…show more content…
The quality of the disclosure is certified by the audit committee and the Company’s outside auditors. The certification required under Section 302 is a change under the Security and Exchange Commission. The certification required under section 906 is an amendment to the U.S. Criminal Code. The overlap of certifications increases the penalty for inaccurate disclosure and/or failure to disclose the required information (Deming, 2006). Sarbanes-Oxley Act is designed to make all personnel accountable for their action or inactions. For example, external, internal, and foreign attorneys are required to report violations to CEO/CFOs. If the officer(s) do not respond to the evidence provided by the attorney(s), they are obligated to report the evidence to the audit committee or another committee of the board. The act also provides protection to whistle blowers under Title VIII: Corporate and Criminal Fraud Accountability Act of 2002 (American Institute of CPAs,…show more content…
References American Institute of CPAs. (2006, June 22). Summary of the Provisions of the Sarbanes-Oxley Act of 2002. Retrieved February 12, 2012, from American Institute of CPAs: http://www.aicpa.org/InterestAreas/ForensicAndValuation/Resources/FraudPreventionDetectionResponse/Pages/Summary%20of%20the%20Provisions%20of%20the%20Sarbanes-Oxley%20Act%20of%202002.aspx Coustan, H. L. (2004). Sarbanes-Oxley: What It Means to the Marketplace. Journal Of Accountancy , 43-47. Deming, S. H. (2006). THE POTENT AND BROAD-RANGING IMPLICATIONS OF THE ACCOUNTING AND RECORD-KEEPING PROVISIONS OF THE FOREIGN CORRUPT PRACTICES ACT. Journal Of Criminal Law & Criminology , 465. Wang, X. (2010). Increased Disclosure Requirements and Corporate Governance Decisions: Evidence from Chief Financial Officers in the Pre- and Post-Sarbanes-Oxley Periods. Journal Of Accounting Research ,

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