SOX was enacted by the US government in response to high-profile accounting scandals by Worldcom, Enron, and Tyco that created a sense of distrust with investors. Enron used several accounting fraud techniques to increase its revenues to attract and investors. Enron used different revenue recognition techniques. Trading companies such as Goldman Sachs and Merrill Lynch use the convention “agent” model to report revenue. In this revenue model, trading or ...
... middle of paper ...
... Supreme Court overturned the conviction. Arthur Anderson never returned to significance.
With such rapid enforcement, SOX is still efficient and effective to this very day. SOX forces individuals to take responsibility for their actions, while protecting those whistleblowers—any person that who exposes legal acts. Alan Greenspan praises the Sarbanes-Oxley Act in his statement, “I am surprised that the Sarbanes–Oxley Act, so rapidly developed and enacted, has functioned as well as it has...the act importantly reinforced the principle that shareholders own our corporations and that corporate managers should be working on behalf of shareholders to allocate business resources to their optimum use” (Greenspan Commencement Speech). The accounting scandals and case law regarding them will go down in history, while making a great impact on modern day accounting standards.
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- On July 30, 2002, the passage of the Sarbanes-Oxley Act (SOX) was enacted to introduce major changes to accounting practices in the United States. The act was enacted in reaction to a number of accounting scandals committed by major companies such as Enron and Worldcom. The act is named after Sarbanes–Oxley was named after sponsors U.S. Senator Paul Sarbanes, a Democrat from Maryland, and U.S. Representative Michael G. Oxley, a Republican from Ohio. The House of Representatives agreed upon the act, with a vote of 423 in favor, 3 opposed, and 8 abstaining.... [tags: Enron, Fraud, Arthur Andersen, Kenneth Lay]
1494 words (4.3 pages)
- Introduction In July of 2002, Congress swiftly passed the Public Company Accounting Reform and Investors Protection Act at the time when corporations like Arthur Anderson, Enron and WorldCom fell due to fraudulent accounting practices and bad internal control. This bill, sponsored by Mike Oxley (R-OH) and Paul Sarbanes (D-MD), became known as Sarbanes-Oxley Act (SOX).It sought to restore public confidence in publicly traded companies and their accounting practices, though the companies listed above were prosecuted on laws that were already in place before SOX.... [tags: accounting, cost, law, efficiency, market, economy]
1765 words (5 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. The Sarbanes-Oxley Act... [tags: federal US law, financial scandals]
1334 words (3.8 pages)
- The large accounting scandals at Enron, Tyco, and WorldCom amongst others prompted the U.S. government to take action. That action happened in the form of the Sarbanes-Oxley (SOX) Act of 2002. Dubbed after U.S. Senator Paul Sarbanes and Representative Michael Oxley, it ordered a number of reformations to improve corporate liability, improve financial disclosures and fight corporate and accounting scams, and created the "Public Company Accounting Oversight Board," also known as the PCAOB, to supervise the actions of the auditing profession.... [tags: Internal control, Enron]
909 words (2.6 pages)
- In the recent years, many businesses have taken a closer look at how the business ethics can either hinder the business or assist them in the growth or sustainability of the business. Examining the different variables of how ethics places into the business’s social responsibilities, and their sustainably organizational strategy and business model. Along with this, both internal and external stakeholders have a part in the influence of the business’s strategy. Although there are many influences to how ethical the business is, many businesses have become more ethically sound after the introduction of the Sarbanes-Oxley (SOX) Act of 2002, which deals with the accounting side of the business (Ba... [tags: Ethics, Business ethics, Management, Business]
859 words (2.5 pages)
- After major corporate and accounting scandals like those that affected Tyco, Worldcom and Enron the Federal government passed a law known as the Sarbanes-Oxley Act of 2002 also known as the Public Company Accounting Reform and Investor Protection Act. This law was passed in hopes of thwarting illegal and misleading acts by financial reporters and putting a stop to the decline of public trust in accounting and reporting practices. Two important topics covered in Sarbanes-Oxley are auditor independence and the reporting and assessment of internal controls under section 404.... [tags: Accounting Corporation Regulation]
1881 words (5.4 pages)
- ABSTRACT This paper provides an in-depth evaluation of Sarbanes-Oxley Act, which is said to be promoted to produce change in the corporate environment, in general, by stressing issues of public accountability and disclosure in the financial operations of business. It explains how this is an Act that represents the government's and the Security and Exchange Commission's concern in promoting ethical standards in terms of financial disclosure in the corporate environment. This paper addresses the current criticism of the exportation of U.S.... [tags: Business Regulation Accounting]
1866 words (5.3 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 publicly traded United States companies create internal controls.... [tags: SOX Act]
782 words (2.2 pages)
- When operating a business having internal controls protects the corporation from internal and external theft along with ensuring employees within the company are acting ethically and within the law. Internal controls set safeguards in place to discourage unauthorized use and theft from current employees and to reduce internal errors or irregularities in the accounting process, which could be construed as misrepresenting the true financial status 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.... [tags: The SOX Act]
702 words (2 pages)
- Internal Controls. Kind of like a brick wall, or a fire wall on a computer. Internal controls act as a way to keep a company and its assets safe, as well as make sure that the company maintains complete and accurate accounting records. Internal controls are in charge of the overall well being of a company from its assets to its employees, even to its sales and reputation. A lot of things are involved with internal controls such as; Sarbanes-Oxley Act, stock well being, well being and safety of assets and accounting accuracy.... [tags: SOX Act, Internal Controls]
1024 words (2.9 pages)