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Law Sarbanes Oxley Act

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The Sarbanes-Oxley act was enacted in the congress after a financial scandal which affected a number of companies and led to the loss of many billions of dollars owned by shareholders in the respective companies (Fletcher & Plette, 2008). To illustrate the severity of the matter under study, the essay shall use the case study of one of the culpable companies Enron which necessitated the drafting of the act by Sarbanes and Oxley. Enron applied for deregulation which meant that the company was not liable to comply with the stipulations of the government in relation to the submission of financial records. Due to deregulation, only the Enron executives had the mandate to inspect the financial records and as a result they resulted to the manipulation of the records so that they could dupe investors into investing in the company. They concealed all reports in the financial records which captured the presence of losses in the prior financial years. The company misrepresented the total earnings and revenue and continued to embezzle the revenue provided by investors. Consequently, the investors lived under the perception that the company was making profits and as a result more investors invested in the company for the financial gains. The executives of the company used the money for their personal gains which led to the discovery of the fraud since the company was approaching bankruptcy in 2001 (Sterling, 2002). Sarbanes-Oxley act gives the Public Company Accounting Oversight Board the mandate to supervise the…...

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