The Sarbanes-Oxley Act

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The misrepresentation of corporate finances has been a frequent news headline during the last ten years, and the negative impact of these actions has had a severe impact on the economy. The temptation can be overwhelming for corporate leaders to step over the legal line in attempts to maximize corporate earnings, which also affects their financial compensation. Companies that ultimately collapse from these inappropriate financial behaviors, eventually put a heavy burden on the economy and many sectors of society. Corporate fraud is defined as “violations of the Internal Revenue Code (IRC) and related statutes committed by large publicly traded (or private) corporations and/or by their senior executives” (Corporate check format of cite [#1]). Employees, lenders, investors, overall financial markets, and the communities in which theses corporations reside are all adversely impacted when one of these corporations fail. “Some of these problems evolve from the interpretation of complex accounting rules” (Six Years).(Sentence is out of place – put in SOX section?) InterNorth, a leading affiliate of North Natural Gas, was formed in 1979. InterNorth and Houston Natural Gas Company merged in 1985 to form Enron Corporation. Kenneth Lay became CEO, and he moved the headquarters from Omaha, NE to Houston, TX shortly after the merger. By 1989, Enron had become one of the leading natural gas distributors in North America after acquiring a large of natural gas pipeline network. As energy markets became deregulated, Enron exploded into the energy market and was allowed to sell energy futures, which are contracts to deliver product at a future date. Enron continued to expand rapidly, moving into the water sector by establishing Azurix,... ... middle of paper ... ...inancial statements. Companies that use off-balance sheet accounting must be in accordance with the Generally Accepted Accounting Principles, and they cannot give a deceptive appearance to the company’s financial well being. In Section 802 it states that anyone who alters, destroys, mutilates, conceals, falsifies records or documents with fraudulent intent will face prosecution. Independent auditors are also subject to prosecution for failing to upkeep all audit or review papers for a timeframe of 5 years. There have not been many favorable opinions supporting the Sarbanes-Oxley Act (restructure this sentence). Investor confidence increased as more corporations produce reliable financial reports, which result in more activity on the stock markets. Some companies increase their productivity by upgrading computer systems that facilitated an efficient workflow.

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