Capstone Response

Nikki Pinkerton

XACC/290

November 29, 2015
Dan Adams

Capstone Response

After reviewing Sarbanes-OXELY Act (SOX) which was established in 2002 we are able to see how this process affects the practice of accounting. SOX is designed to work with the internal controls that we have learned about this past week. Its main purpose is to ensure that auditors have no connection with the company they are auditing. No connection of any kind. Enron was one of the many companies committing fraud when the company was defunct and went bankrupt, this is why the SOX act was created. The requirements for under the SOX include statement of management’s responsibilities, allowing sufficient internal controls. This assessment is completed by management usually toward the end of the fiscal year. They will also the effectiveness of internal controls and procedures inside and outside. Sox ensures that all organizations are being checked and audited sparingly in order to aid in the consistency and accuracy of the information. Since this act was put in place in the year 2002 it has implanted stricter guidelines for organizations and is making the cover up of fraud much more difficult. Using external audits as the result of the SOX accounting scandals has come to an end. This process has ensured that all auditors have absolutely zero connection to the company that is being audited. I am sure they have to under go a very extensive back ground inspection. This act also makes sure that all documentation and literature are the same across the board and all organizations are judged the