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Adoption of the Sarbanes-Oxley Act of 2002 as an Important Piece of Legislation

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Adoption of the Sarbanes-Oxley Act of 2002 as an Important Piece of Legislation

Accounting I
02/27/2011

Analyze the new or enhanced standards for all U.S. public company boards, management, and public accounting firms that the SOX required.
The main purpose of the Sarbanes Oxley Act was to establish an accountable system of regulations and policies to ensure proper compliance. The set of standards and deadlines the act put into place was mainly in response to an alarming amount of corporate and accounting scandals. With hopes of restoring the nation’s faith in its capital market, this government enacted legislation was divided into eleven sections that ranged from additional penalties to the establishment of a new accounting oversight committee, the Public Company Accounting Oversight Board. Overall the new standards made publicly held corporations more liable for their actions or inactions, and even set in place procedures to apply to new legislation.
The first tittle of the SOX established the Public Company Accounting Oversight Board (PCAOB), and their purpose was to deliver proper registration of all auditors as well as ensure proper compliance with specific mandates. Part of the first title was also the exact definition of specific processes and procedures that all auditors must adhere to while performing their duties. The board also established policies that emphasized the importance of policing conduct, verifying compliance, and ensuring exceptional quality control.
Title two of the SOX deals mainly with the independence of auditors. It sets policies for external auditor’s independence, decreasing the instances of conflicts of interests. Along the same line, another section in title two restricts auditing firms from providing services not related to auditing, while providing auditing services to the same firm. Title two also establishes the new

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