Sarbanes Oxley- Investor Confidence Act Essay

Sarbanes Oxley- Investor Confidence Act Essay

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The problem to be investigated is the purpose and exactitude of the investor confidence act entitled the Sarbanes Oxley Act. This act was created in 2002, to increase public confidence in the accuracy and transparency of public companies financial reports. (Jennings, 2012) This assessment and regulation act was created for the reason that corporate governance within many companies such as Enron, Lehman Brothers and other companies failed to act responsibly in regard to the public trust and were recognized as ethics violators.
Issues covered by Sarbanes Oxley
There were seven sections created to handle different aspects of the management, assessment and regulation issues relating to the investor confidence act. These sections include:
Public Company Accounting Oversight Board (PCAOB); Auditor Independence; Corporate Responsibility; Enhanced Financial Disclosures; Analysts Conflicts of Interest; Corporate and Criminal Fraud and White-Collar Crime Penalty Enhancement Act of 2002. (Jennings, 2012)
A brief explanation for each section follows:
Part one (PCAOB) was created to oversee public company audits, establish audit report standards and rules and investigate as well as inspect and enforce compliance. This was accomplished through the registration and regulation of public accounting firms under the direction of the Securities Exchange Commission (SEC). The PCAOB entity had the power to discipline companies that were found to show intentional, repeated negligence with their financial audits. Sanctions could be imposed along with banning the company from future auditing practices, if necessary. (Nagy, 2010) Recommendations were given for both a study and a general movement toward adopting principles based accounting, yet n...


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...hite paper]. Retrieved from http://www.iim-edu.org/corporategovernancesarbanesoxleybestpractices/index.htm:
Lindorff, D. (2011, March 1). Governance and Accounting. Treasury and Risk. Retrieved from http://web.ebscohost.com.proxy1.ncu.edu/ehost
Maleske, M. (2012). SOX Unraveled. Inside Counsel, 23 (241), 53-58. Retrieved from http://web.ebscohost.com.proxy1.ncu.edu/ehost
Nagy, D. M. (2010, April 15). Is the PCAOB a “heavily controlled component” of the SEC?: An essential question in the constitutional controversy. University of Pittsburg Law Review, 71 (3), 361-402. Retrieved from http://web.ebscohost.com.proxy1.ncu.edu/ehost
Ramirez, S. A. (2012). A flaw in the Sarbanes-Oxley Reform: Can Diversity in the Boardroom Quell Corporate Corporation? St. John’s Law Review, 77(4), 1-31. Retrieved from http://scholarship.law.stjohns.edu/cgi/viewcontent.cgi?article=1338

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