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Law 421 Week 5 Article Review

In: Business and Management

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Article Review Format Guide

MEMORANDUM
UNIVERSITY OF PHOENIX

DATE: June 2, 2015
TO: James Crossen
FROM: Joshua Parrott
RE: Niskanen, W. A. (2006). Congress Should Repeal the Sarbanes-Oxley Act. Retrieved from http://www.cato.org/pub_display.php?pub_id=6624

ARTICLE SYNOPSIS

This article was a proposal that really tried to give a good reason for that congress should reverse the Sarbanes-Oxley Act (SOX Act) of 2002. This act is seems like it's a problem because people felt that this act was only in place so government (people in charge of something) could feel better when dealing with some of the issues of popular concern ratherthan resolving the issue. According to Niskanen the SOX act of 2002 is unnecessary, harmful, and inadequate (2006). Punishments under this act included jail time and loss of personal property. This act was viewed as unnecessary because the stock exchange has already talked to/looked atand put into use procedures to deal most problems presented in the SOX act of 2002. Those uses include accounting standards, audits, prosecution for illegal dishonesty related to managing money and reporting procedures. Officials felt that both acts addressed the same issues therefore, congress should deem the SOX act of 2002 unnecessary.

The SOX act of 2002 was viewed as harmful because it would “reduce the incentive of corporate executives and directors to seek legal advice” (Niskanen, 2006). It was also seen as harmful because it causes a ban on loans to corporate officer which would pose a problem for compensation..
The act was viewed as inadequate because it “failed to identify and correct the major problems of accounting, auditing, taxation, and corporate governance that have invited corporate malfeasance and increased the probability of bankruptcy” (Niskanen, 2006).
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