Unethical Behavior Article Analysis
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The Sarbanes Oxley Act was passed as a result of plenty of corporate scandals. The purpose of this act was to protect investors and to provide them with accurate and reliable information, and to disclose all information that can affect an investor’s decision. It was passed to restore the confidence of investors. The Sarbanes Oxley Act has impacted financial statements in several ways. The act has asked that independent firms should audit the financial statements in which positions of the auditors should be rotated from time to time, so that fraud cannot be hidden by the same auditor year after year. Section 303 of the act requires senior management to certify the accuracy and reliability of financial statements. The Sarbanes Oxley Act requires that the financial statements of the company must be signed off by the CEO and CFO of the company. Executives will be held responsible for any accounting irregularities by signing authentic documentation they are fully aware of the accounting rules and regulations and that they will be held accountable for any simple inept errors or deliberate fraud, reckless breach of fiduciary duty, blatant negligence, scheming to defraud, and so on. The SOX act has made CEO’s and CFO’s more responsible, thus, they (CEO’s and CFO’s) must certify that they have reviewed the financial statements of the company and that the statements are true to the best of their knowledge. Section 302 (management assessment of disclosure controls) requires disclosure of material information to the Securities & Exchange Commission (SEC).
Section 401 (disclosures in periodic reports) of the Sarbanes Oxley Act has made it mandatory for companies to disclose their off balance sheet financial arrangements unlike previous practices in which certain leases of