The Sarbane Oxley Act (Soa) Essay

1963 words - 8 pages

INTRODUCTION

"The Public Company Accounting Reform and Investor Protection Act" was signed into law by President Bush on July 30, 2002. The law is now known as The Sarbane-Oxley Act (SOA). The SOA has eleven titles within the act and numerous sections, pertaining to ethics, accounting, financial reporting, responsibilities of officers, whistleblower protection, and increased criminal penalties built upon prior securities laws. SOA is the most comprehensive securities legislation written since the 1940s. In the early part of the twentieth century companies did not have the sophistication and abilities of the modern company in regard to information technology, number of accountants, advisors and analysts. This legislation is a big step toward keeping U.S. law up to date with modern business practices. The Sarbane-Oxley Act was necessary to protect the U.S. economy and restore investor confidence after the many years of dishonest business practices by ENRON, WORLDCOM, TYCO and other companies.

The practitioners of shady accounting and greed brought about a collapse in stock prices, shook investor confidence and hurt the credibility of all publicly traded companies. A mass "bail-out" by large stockholders ensued; however the average small investor held on, hoping that the stock would stabilize and believing the reassurances of companies, that claimed they were financially well-off when they were actually worth less than what they owed. In the end, investors and lower-rung employees of these companies were devastated financially. The underhandedness and greed of these corporate officers had the potential to hurl the U.S. economy out of control. The small investors, who are registered voters demanded action.

This paper will review the sections of The Sarbane-Oxley Act, highlight their broad implications and discuss compliance. Compliance will cost all publicly traded companies a great deal of money. ?Deloitte's Point of View? will be used to illustrate that compliance, when embraced properly and approached positively can bring rewards for companies in the long term.

SECTIONS
The sections that follow are a simplification of the Sarbane-Oxley legislation. There

are many niches that will require attorneys, accountants and advisors. Keep in mind all prior SEC (securities exchange commission) legislation such as (The Securities Act of 1933, Securities Exchange Act of 1934, Public Utility Holding Company Act of 1935, Trust Indenture Act of 1939, Investment Company Act 1940, and The Investment Advisors Act of 1940) are all still in effect. All securities legislation can be found at: www.sec.gov/about/laws.shtml.

Sections 302, 304, 306, 402, 403 and 406 are designed to improve the ?Tone at the Top? of companies. The sections are primarily geared towards the CFOs, CEOs and other company officers. An example is under section 302; the CEO and CFO need to personally certify financial documents pertaining to annual and quarterly reports....

Find Another Essay On The Sarbane-Oxley Act (SOA)

Internal Controls and the Sarbanes-Oxley Act

790 words - 3 pages Internal controls are in place to protect entities against theft from dishonest workers and outside predators. They are also an accurate series of checks and balances and are in place to find discrepancies. The Sarbanes-Oxley Act of 2002 (SOX) was named after Senator Paul Sarbanes and Michael Oxley. The Act has 11 titles and there are about six areas that are considered very important. (Sox, 2006) The Sarbanes-Oxley Act of 2002 made

The Sarbanes Oxley Act of 2002

1464 words - 6 pages H.R.3763 - The Sarbanes-Oxley Act of 2002 A lot has been made, perhaps without justification, of the July 30, 2002 passage of H.R. 3763, The Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley" or The Act). Having read the Act, I suspect that the great praise is unfounded. I intend to address three issues presented within the act. First, I will address stock options as considered (or neglected, as the case may be) by Sarbanes-Oxley. Second

The Sarbanes-Oxley Act of 2002

4800 words - 19 pages The Sarbanes-Oxley Act of 2002Introduction2001-2002 was marked by the Arthur Andersen accounting scandal and the collapse of Enron and WorldCom. Corporate reforms were demanded by the government, the investors and the American public to prevent similar future occurrences. Viewed to be largely a result of failed or poor governance, insufficient disclosure practices, and a lack of satisfactory internal controls, in 2002 George W. Bush signed into

The Sarbanes-Oxley Act: Protecting Corporate Assets

1071 words - 4 pages -Oxley Act, stock well being, well being and safety of assets and accounting accuracy. One of the Internal Controls main purposes is that of keeping a companies assets safe, whether that be from employees, robbers, or misuse from outside parties. As one can figure keeping a companies assets would be a very important task that would keep a company running smoothly and successfully if all went well. Internal Controls will work to maintain the

The Sarbanes-Oxley Act: Internal Controls

700 words - 3 pages of the company. The chances of a company employing a person who has the ability to steal money has been shown to be greater when there are no checks and balances to monitor the financial statements and to deter a normally honest person. With the scandals, which have plagued publicly traded companies in order to protect the investors Congress passed the Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act or SOX is considered one of the most

The Sabarnes-Oxley Act and PCAOB

794 words - 4 pages PCAOB inspects registered public accounting firms to assess compliance with the Sarbanes -Oxley Act , the rules of the Board, the rules of the Securities and Exchange Commission , and professional standards in relation to the performance of the firm , issuance of audit reports, and related matters other issuers , brokers and dealers . The Act requires the Board to carry out these inspections annually to companies that regularly provide audit

Sarbanes-Oxley Act and the Insurance Industry. Article Analysis about the Sarbanes-Oxley Act

859 words - 3 pages Sarbanes-Oxley Act and the Insurance IndustryJames M SmithUniversity of PhoenixSarbanes-Oxley Act and the Insurance IndustryThe Sarbanes-Oxley Act was signed into legislation in 2002 and made major changes in the regulation of financial practice and corporate governance. This paper will analyze a specific article while explaining how the Sarbanes-Oxley Act impacts the internal control of the insurance industry. This paper will also discuss

How The Sarbanes-Oxley Act Will Impact The Audit Function

2007 words - 8 pages Sarbanes-Oxley Act of 2002, the most significant federal legislation in the securities area since the 1930's. The new law places significant burdens on auditors and executives who are required to make specific certifications and representations about the internal controls of public companies. The Act requires auditors to test the scope of a firm's internal control procedures and present its findings in its annual audit report. This audit report

The Sarbanese-Oxley Act and Its Importance in Business

1261 words - 6 pages confidence; as well as devastating monetary losses to stakeholders across the nation. The United States Government knew that an investor lack of confidence could hinder or slow the US economy, and because of this took measures to act quickly. Just seven months after the biggest corporate scandal in American history, President Bush signed into law the Sarbanes-Oxley act of 2002 (2002), as well known to be The Public Company Accounting Reform and

Effects of Regulation with the Sarbanes-Oxley Act

1636 words - 7 pages that interacts through firms and individuals. This regulatory environment exists as a series of laws and directives on the various government entities interact to ensure this protection. These laws and directives protect the public from fraud. This coverage of the regulatory environment even protects the public from fraud that happens within a corporation. Laws, such as the Sarbanes-Oxley act of 2002 give protection against internal fraud

Sarbanes - Oxley Act of 2002 and the Effect on the Business Environment

2856 words - 11 pages The Sarbanes - Oxley Act of 2002 is the most important piece of legislation since the 1933 and 34 securities exchange act, affecting everything from corporate governance to the accounting industry and much more. This law was in direct response to the failure of corporate governance at Enron, Tyco, and WorldCom. The Sarbanes - Oxley seeks to bring back the confidence in all publicly held corporations to the shareholders, while placing more

Similar Essays

The Sarbanes Oxley Act Essay

1014 words - 4 pages initiated a formal investigation. The collapse of Enron and several other large corporations influenced Congress to take action, and this led to President Bush signing the Sarbanes-Oxley Act (SOX) into law on July 30, 2002. The founders of the Act are U.S. Senator Paul Sarbanes and U.S. Representative Michael G. Oxley. The act is composed of eleven sections ranging from additional board responsibilities to criminal penalties. The new law

About The Sarbanes Oxley Act Essay

2203 words - 9 pages -Oxley Act in 2002. The act introduced changes to the regulation of corporate governance. The intent of the act is to protect investors from inaccurate financial reporting. It sets forth strict compliance regulations and harsh penalties for violations (Cross & Miller, 2012). The Sarbanes-Oxley Act is made up of eleven titles designed to restore public opinion and trust. The titles address issues independent of one and another, but it is the

The Sarbanes Oxley Act Of 2002 Essay

3096 words - 12 pages Peter ValliProfessor MorrisTerm Paper5-7-2014The Sarbanes-Oxley Act of 2002IntroductionMany of us were not too young to remember some of the large corporate and accounting scandals that took place in the early 2000's. The scandals involving very large corporations such as Enron and WorldCom really shook up the marketplace. Not only did these scandals result in investors losing millions upon millions of dollars, but it really diminished

Overview Of The Sarbanes Oxley Act (Sox)

1855 words - 7 pages The Sarbanes-Oxley Act, frequently known as the SOX. The act was passed on in 2002 as a federal United States law. The law was drafted in response to the numerous numbers of financial scandals performed by high profile corporations such as Johnson & Johnson. The action has created a new company standard of responsibility in order to protect the valued stakeholders, as well as the public, from the deceitful practices of various organizations