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 the expense of hard working employees, shareholders and stakeholders. The end result however, has proved disastrous. Workers have been laid off, thousands of people have lost their savings due to rapidly falling stock prices of their firm during rapidly imposed black out periods when employees were unable to pull their monies out. The collapses of Enron and WorldCom, as well as other well-publicized financial debacles, have led to an unprecedented level of attention paid to corporate governance, financial disclosure, and auditing issues. The ensuing Sarbanes-Oxley Act of 2002 has been described as the most important securities legislation since the original '33 and '34 Acts were passed. The SEC, NYSE, and NASD all have weighed in with their own rule changes. Corporate counsel, both in-house and outside, have needed to react to all of these developments rapidly, and often in a crisis environment.
Executive Summary
Corporate greed and corruption has changed the face of American business forever. Consumer confidence has spiraled down and the bottom is unforeseen. Corporate greed was the primary factor in the downfall of Enron, Global Crossing and MCI WorldCom. The governing bodies, the Securities and Exchange Commission also known as the SEC, the Senate, NASD and other powers that be has decided that enough is enough. In 2002, the Senate introduced the Sarbanes-Oxley Act of 2002. This new law impacts CPA's, CPA firms auditing public firms, publicly traded firms and their employees, lawyers, brokers, dealers, investment bankers and financial analysts who work for or have as clients as publicly traded companies. This law has established a New Public...
CPA firms are now held to a higher level of accountability and must now ensure that ethical standards become best practices and they conflict of interests or too close relationships between the auditor and the firm being audited is avoided at all costs.
Sarbanes-Oxley Act of 2002
Purpose and Mission
In reaction to corporate scandals that have occurred over the past few years, the Sarbanes-Oxley Act of 2002 was born. On Tuesday, July 30, 2002 President Bush signed the act putting it into law. The Act was unanimously passed in the Senate and won in the House of Representatives by a margin of 423-3. The main purpose of this law is to increase corporate governance, financial disclosure and to toughen the auditing requirements.
What it does
The Sarbanes-Oxley Act of 2002 creates the New Public Company Accounting Oversight Board (PCAOB). This board will consist of five SEC appointed financial literate members, only two of which can be CPA's. The board's primary duties will consist of registering public accounting firms that prepare audit reports; and establishing or adopting auditing, quality control, ethics and independence standards. Furthermore, the board also inspects, investigates and disciplines public accounting firms and enforces compliance with the act. In addition, the Board is also charged with the following significant duties:
Ensuring that all public accounting firms, foreign or domestic registers with the Board. In addition, the Board also has the authority to retrieve annual dues, which will used to process and review applications and annual reports.
The Board is also required to mandate that CPA firms prepare and maintain audit work papers and other information related to an audit for at least seven years
CPA firms that provide audit reports for 100 or more issuers will be inspected annually by the board, other firms can expect to be inspected at least once every three years.
The Board also has…
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)
Sarbanes-Oxley Act -- it's a good thing In the wake of the horrible corporate scandals of recent years, including Enron and Arthur Anderson, it became readily apparent that some kind of regulation of ethics must be established. Indeed, any scandal in which large numbers of investors lose billions of dollars due to misconduct, is likely to bring action, and the Sarbanes-Oxley Act of 2002 is just that. However, although much is said
Sarbanes-Oxley Act on Internet security systems As well as impacting accounting, the Sarbanes-Oxley Act also had a significant impact upon IT security: "Each organization that is affected by the Sarbanes-Oxley Act has some level of reliance on automated information systems to process and store the data that is the basis of financial reports. The Act requires these organizations to consider the IT security controls that are in place to promote the
Sarbanes-Oxley Act While most Americans know the names Enron and Worldcom, fewer know the term Sarbanes-Oxley Act; however, despite the alarming impact of the two business disasters, the potential impact of Sarbanes-Oxley stands to exceed the impact of those two bankruptcies many times over. While Enron and Worldcom each held a claim to 'biggest' or 'most' in some aspect of global business and also in various aspects of global business disaster,
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