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Sarabanes Oxley Act of 2002

In: Business and Management

Submitted By catgirl
Words 1248
Pages 5
Sarbanes-Oxley Act of 2002 The Sarbanes-Oxley Act of 2002 (SOX) resulted from the consequences of the financial disasters perpetuated by financial institutions such as Enron, Worldcom, and even the Savings and Loan debacles that served to fool and cripple the financial markets. As a result of their deceptive accounting practices, many investors lost millions of dollars. SOX was signed into law by President George Bush on the 30th day of July in the year 2002. The Act was lawmakers and legislators reaction to highly publicized financial reporting scandals like the ones involving Enron and WorldCom that had shaken investors' confidence in financial reporting and auditing and negatively influenced the quality of earnings from improper recognition of different items such as operational expenses on the income statement or liabilities on the balance sheet. The intended purpose of the SOX Act is to protect investors by improving the accuracy, and reliability of corporate financial reporting disclosures made pursuant to the securities laws, and for other purposes (James, 2006). The provisions of the SOX directly or indirectly affects several business professionals, including CPAs, managers and executives, financial statement analysts, and even lawyers. The provisions of the SOX are described in eleven titles, each one including numbers of subsections. SOX also offers harsh penalties for SOX violations, which constitute violations of the Securities Act of 1934 (James, 2006). The Sarbanes-Oxley Act of 2002 will be explored and described and its intended impact to prevent unethical accounting practices addressed as well as an evaluation of whether SOX will be effective in conclusion, in the paragraphs that follow.
The primary goals and tenets of SOX with respect to fraud The primary goals and tenets of the Sarbanes-Oxley Act of 2002 (SOX) are focused on making

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