The Sabanes Oxley Act - 1273 Words

The ethical breaches of numerous prominent corporations prompted Congress to pass legislation in response to accounting misconduct. The purpose of the Sarbanes Oxley Act of 2002 (SOX) was to protect investors by increasing the reliability of financial reporting and enhancing audit quality. One of the most influential and costly parts of the Act is Section 404. Section 404 requires companies to establish internal controls and test procedures that are designed to monitor and prevent manipulation of financial data (Brite, 2013). This requires all CEO’s and CFO’s to certify that they have reviewed all financial reports and there are no false and misleading information. The Public Accounting Company Oversight Board (PACOB) was established under the supervision of the Securities and Exchange Commission (SEC) to oversee and regulate auditing standards by enlisting external auditors to review the accuracy of financial statements and enforce laws. The Sarbanes Oxley law has be en in existence for over 10 years and corporate fraud is still prevalent in today’s corporate environment. Corporate accounting scandals are still a major issue with companies like Wal-Mart, Green Mountain Coffee, Oracle and Glaxo Smith Kline to name a few. A study was conducted by the Association of Certified Fraud Examiners between January 2006 and February 2008 based on 959 occupational fraud cases. The study revealed that most common fraud schemes were corruption, which occurred in 27% of all cases,Show MoreRelatedSabanes Oxley Act of 20022009 Words   |  9 Pagesfinances, but is not acceptable to use for reporting taxes. This method was used by many until it was no longer acceptable to use for reporting taxes. This occurred when the Accelerated Cost Recovery System was placed. Noland (2011) stated that this act, that was placed in 1981 specified both the life of the asset and the depreciation rate for tax purposes (p. 2). This system has changed and has been renamed and is now known as MACRS. The Modified Accelerated Cost Recovery System is another modelRead MoreHealth Insurance Portability And Accountability Act1914 Words   |  8 Pagesuse of their computer systems (2003 CSI/FBI Computer Crime and Security Survey). Laws have always and will always be behind criminal acts, and new laws are put in place to tackle the every changing technological advancement. Law Review Health Insurance Portability and Accountability Act (HIPAA) The Health Insurance Portability and Accountability Act of 1996 (HIPAA) required the Secretary of the U.S. Department of Health and Human Services (HHS) to develop regulations protecting theRead MoreFinancial Statement Analysis : Financial Analysis1558 Words   |  7 Pagesdone, the Sabanes-Oxley Act was introduced to CFO and CEO which had to sign a statement attesting to the accuracy and completeness of the company s financial statement. With the Sabanes-Oxley Act makes sure that the companies executives are following a straight arrow in the company s financial statements, if not and executives are caught doing illegal transaction they can result in jail. In 2010, Congress passed The Wall Street Reform and Consumer Protection Act (or the Dodd-Frank Act), in thisRead MoreThe Sarbanes Oxley Act Of 20021557 Words   |  7 PagesCorporate Fraud: What Led to the Creation of the Sarbanes-Oxley Act The Sarbanes-Oxley Act of 2002 was created in reaction to the increasing number of accounting fraud scandals in the late nineties and early 2000 s. One example of an accounting scandal that occurred was Enron. Andrew Fastow, the CFO at the time, created phony partnerships and companies, keeping separate books for these companies. He convinced some of the major banks to invest in these companies. The Vice-PresidentRead Moreassignment 3 Essay1087 Words   |  5 Pagesassurance that the company achieve its objectives in the following areas: – Reliability of financial reporting – Compliance with applicable laws and regulations – Effectiveness and efficiency of operations Continued from previous slide 2. THE SABANES–OXLEY ACT 2002 (SOA): The intent of the SOA is to reduce the likelihood that material fraud will go undetected. The SOA includes the following major provisions – The creation of the Public Companies Accounting Oversight Board (PCAOB) – Rules designed toRead MoreThe Federation Employment And Guidance Service1939 Words   |  8 Pages(Rhode (2009). It is exactly this faltering public confidence in nonprofit organizations that has led to more attention being paid The Sabanes-Oxley Act which outlines guidelines for best practices in governance and board oversite of financing. Unfortunately, SOX regulations are—for the most part—voluntary for NPOs. Even with guidelines such as the Sabanes-Oxley Act, it is still difficult for managers to determine what constitutes their duty of care. There is an important lesson to learn from whatRead MoreEssay Nike- Ethical Issues1454 Words   |  6 Pagesis taking responsibility for its actions and showing the global market that is does take an interest in those working in the factory. This helps to alleviate any hesitation consumers may have with purchasing products made by Nike. The Sarbanes-Oxley Act of 2002 can help Nike monitor the compliance of the factories in foreign companies because it can help Nike monitor the wages paid to its employees more closely to ensure they are being paid fairly. As well it can help the company identify any significantRead MoreEthical Dilemma Of Recording Unrecognized Revenue Under The Generally Accepted Accounting Principles1528 Words   |  7 Pagesis having a horrific quarter in sales. It may then choose to recognize income that has not yet been collected as income with intention to boost its sales revenue for the quarter. It is illegal for an accounting professional to alter books under Sabane Oxley accounting rules. Besides, the decision to change the revenue can be damaging to the firm’s reputation and a lost in expecting returns for the investors. An example is Enron, who fraudulently reported information that caused a devastation effectRead MoreThe Changing Role of Managerial Accounting in a Dynamic Business Environment1723 Words   |  7 Pageslack of sufficient probing by Wall Street analysts and the financial press, and overly aggressive accounting. †¢ Various reforms have begun to surface that remedy deficiencies in corporate governance and accounting. For example, the Sabanes-Oxley Act both: âž ¢ Created the Public Company Accounting Oversight Board (PCAOB) to establish auditing standards and provide for an audit quality review process, and âž ¢ Limits the types of non-audit work that public accounting