¶ … Sarbanes-Oxley act on auditing
Changes as a result of the 2002 Sarbanes-Oxley law
In the wake of numerous corporate accounting scandals, several of which involved the famed and trusted accounting firm of Arthur Anderson, the U.S. Congress instituted the 2002 Sarbanes-Oxley Act (SOA). The Act was designed to reduce the likelihood of "cooked books, exorbitant [undisclosed] salaries and loans to CEOs, conflicts of interest by auditors, and hyped-up stock reports by securities analysts at some of America's highest-flying companies and investment firms" (Has Sarbanes-Oxley made a dent in corporate America's armor, 2004, Knowledge @Wharton). One of the reforms of SOA was to demand "significantly higher responsibility from audit committees of publicly traded companies" while amending the Securities Exchange Act of 1934 "to make the audit committee of a reporting company an important participant in the financial reporting process of the company" (Pandit, Subrahmanyam, & Conway 2005). Audit committees have been required since 1990, when the...
Now, SOA sections 202, 301, and 407 mandate new standards of independence for such committees (Pandit, Subrahmanyam, & Conway 2005).
All members of the committee must be independent of affiliations to the audited entity and at least one member must be a 'financial expert' as defined by the SEC. "The audit committee is directly responsible for the appointment, compensation, and oversight of the auditor, who in turn reports directly to the audit committee" and "all auditing services and most nonauditing services must be preapproved by the audit committee" (Pandit, Subrahmanyam, & Conway 2005). The audit committee also may seek out independent counsel and other advisors to carry out its role and "must establish procedures for the receipt, retention, treatment, and confidential handling of complaints regarding accounting- and auditing-related matters" (Pandit, Subrahmanyam, & Conway 2005). None of these stipulations were required…
Sarbanes-Oxley Act (SOA) was put into law in 2002 following the revelations that Enron (and Enron's accountancy Arthur Anderson), WorldCom, and other corporations were using blatantly corrupt practices in accounting and causing huge losses for stakeholders in those firms. Moreover, the U.S. Congress could not simply stand by and allow companies to use unethical and illegal practices to scam huge sums of money for corporate executives while stripping the IRAs
Sarbanes-Oxley Act Evaluating the effectiveness of the Sarbanes-Oxley Act The Public Company Accounting Reform (PCAR) and Investor Protection Act (IPA) was established in mid-2002 by the congress with the emergence of unceremonious scandals in accounting practice that resulted in firms going bankrupt and losing huge stocks in the stock market (Prentice & Bredeson, 2010). This act is what is referred to as Sarbanes-Oxley act of 2002. The act also led to the
Sarbanes-Oxley Act The objective of this study is to read the guide to the Sarbanes-Oxley Act and to: (1) Evaluate the effectiveness of regulations such as Sarbanes-Oxley Act over minimizing the corporate fraud and protecting investors make one suggestion for improvement; (2) Given the oversight of the accounting profession by the PCAOB as a result of the Sarbanes-Oxley Act, assess the impact on auditing firms and the public accounting professions; (3)
The investors got intoxicated by fraud happened to them because of greedy people. Thousands of employees left as the stock market went to the peak but most of them left their jobs due to low pay as well. (Kerry Hannon, July 6, 2005) bill was passed by the President Bush after the corporate fraud nearly just after three weeks on April 25, 2002. It referred to the Senate Banking
Sarbanes-Oxley Act The Impact Upon the Accounting Profession What it does The Effect of Sarbanes-Oxley on the Accounting Profession New Rules, New Practices The past few years have remarkably changed the face of American business. Corporate scandals involving America's largest companies have shaken the confidence and trust that the public once had in big business. The desire to boost earnings has led some executives to commit crimes, in order to fatten their own pockets, at
Sarbanes-Oxley Act of 2002 The accounting profession was entangled in the accounting and business scandals whirlwind that rocked the American economy in 2002. To recover investor confidence in financial data, the Sarbanes-Oxley Act designed a new Oversight Board for public Company accounting with the power to set requirements for auditors of public organizations, thus bringing to an end a century of export control of audit. We determine that this reform results