Sarbranes-Oxley Impact on Corporate America
Business and Management
Submitted By jamison206
Professor Phillip Miller
Principals of Management
12th, December 2012
Sarbanes-Oxley Act’s Impact on Corporate Business
Business scandals, Ponzi schemes and fraud are something we have all heard of. Over the years there have been many accounting scams from companies all over the world. We all remember one of the most publicized cases of fraud, Enron. For many years there has been fraudulent activity in many companies. Sarbanes-Oxley was established to prevent these types of scandals. Some believe it is not as valuable as once predicted, but is anything 100% preventable?
Prior to Sarbanes-Oxley Act, the Securities and Exchange Commission was in place since 1934. It was established to police U.S. financial markets. However after years of failure and proof that the Securities and Exchange Commission’s wasn’t enough, the Sarbanes-Oxley Act was born. In 2002 Sarbanes-Oxley Act was created by Senator Paul Sarbanes and Representative Michael Oxley. Several large company failures not only sparked the public on fraud activity, but also these two gentlemen who decided to put into place something that would enforce financial honesty in businesses.
There are several layers to the Sarbanes-Oxley Act. ,For example section 404 requires companies to have internal control report with their annual audits. This section of Sarbanes-Oxley also puts accountability and personal liability on the accounting teams of the companies.
The infamous Enron scandal unraveled itself in 2001. Enron marketed gas and electricity among other public utilities. They were the 6th largest energy company in the world. In addition, they also provided financial and risk management services to customers all over the globe. Enron was established in 1985 and by 2000 they made the Fortune 500 list. In 2001 after some internal accounting concerns, Enron...