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Sox Anaylzation

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Submitted By moyosoreb
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Pages 15
Group 2 Assignment: The Sarbanes-Oxley Act (SOX) & Financial Statements Accuracy

University of Maryland University College

Geralda Francois Courtney Holbrook
Nicole Mone Walker
Moyosore Bankole

AMBA630
Mark Wylie
August 18, 2015

Introduction
The United States Securities and Exchange Commission (SEC) was created after the Great Depression of the 1930’s, and given a mandate to oversee US financial markets. Since then its basic policy has been to promote transparency in corporate finance, through the full disclosure of companies’ financial performances. This allowed the SEC to maintain a strong track record of corporate financial disclosure oversight through the 1990’s, when a period of rapid stock market growth and crashes rocked the system (Introduction to SOX, n.d). During that period, companies such as Enron and Sunbeam Corporation abruptly filed for bankruptcy or devalued overnight. This occurred largely because they concealed the real state of their financial health on audit reports (Livingston, 2003, p.7).
In response to these scandals the US Congress passed the Sarbanes-Oxley Act of 2002 (SOX). Many of the provisions in SOX give additional powers to the SEC, including jurisdiction over the new Public Accounting Oversight Board and oversight over private industry Generally Accepted Accounting Principles (GAAP), and Generally Accepted Auditing Standards (GAAS). Moreover, U.S. public company CEOs and CFOs must certify the accuracy of financial statements, and disgorge equity and incentive based compensation when required. The act ensures that U.S. public company officials are prohibited from influencing independent auditors, and makes it a felony to “knowingly” manipulate documents or impede an investigation (Livingston, 2003, p. 7).
This paper will discuss the implications of SOX on the financial community as it relates to changes...

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