Law 421 Week 1 Summary
Article Review-Part A
Lora Carr
LAW/421
July 29, 2013
Joseph Sette
Article Review-Part A The Sarbanes-Oxley Act of 2002 was put in to place as a way of preventing and deterring future accounting fraud, protecting shareholders, and increasing confidence in public company financial reporting. However, SOX has imposed tremendous new duties and costs on public companies and accounting firms. Some individuals may call it an object failure while SOX hoped to create more confidence in capital markets it does not prevent fraud or abuse from occurring. It is undeniable that SOX has led to greater internal control of financial reporting, and increased expertise and independence among more-focused boards, committees, and directors. SOX …show more content…
However, after the first year, companies identified the benefits of a better understanding of design and increased effectiveness and efficiency of operations and personnel (Maleski, 2012). SOX has helped companies go through a traditional route of growth and maturing because of the increased duties supplied from the Act. Section 404 of SOX imposes the requirement that companies must hire third-party independent auditors to assess their internal controls. Because of this, there are individuals who say they never really understood their business until this happened therefore it allowed business people a better understanding along with the wants of making better choices. Among other measures, SOX extended the statute of limitations for the SEC to pursue actions and increased penalties at their disposal. SOX changed the balance of power between companies and prosecutors, putting prosecutors in the driver’s seat (Maleski, 2012). With the disclosures made clear and the facts of what is required of public companies, it is easier for agency’s to pursue enforcement. The core values when making disclosures have become clear since SOX extended the statute of …show more content…
Knowingly or willfully failing to retain audit work-papers in violation of new U.S.C. Section 1520 or SEC rules pertaining thereto, with a penalty of fine and/or up to 10 years imprisonment. Section 1520, added by Section 802. 6. A CEO’s or CFO’s making a certification under new U.S.C. section 1350 known to be false, with penalty of up to a $1 million fine and/or 10 years imprisonment, or up to $5 million fine and/or 20 years imprisonment if done willfully. Section 1350, added by Section 906. 7. Knowingly retaliating against an informant for providing, to law enforcement officer truthful information, with penalty of fine and/or up to 10 years imprisonment. Section 1513, added by Section 1107.
The Sarbanes-Oxley Act has made a profound difference in the business world.
Although the criminal provisions have not been well-received because of the complaints that they are needlessly redundant, the face of crime in business has decreased. With the number of fraud defendants who actually receive prison time, opposed to probation increasing, it is believed that they provisions have done more good than harm. This allows individuals to make better choices and ethical decisions based on the outcome in which one knows they will receive.
References
Maleski, M. (2012). Inside Counsel Magazine. Retrieved
Lora Carr
LAW/421
July 29, 2013
Joseph Sette
Article Review-Part A The Sarbanes-Oxley Act of 2002 was put in to place as a way of preventing and deterring future accounting fraud, protecting shareholders, and increasing confidence in public company financial reporting. However, SOX has imposed tremendous new duties and costs on public companies and accounting firms. Some individuals may call it an object failure while SOX hoped to create more confidence in capital markets it does not prevent fraud or abuse from occurring. It is undeniable that SOX has led to greater internal control of financial reporting, and increased expertise and independence among more-focused boards, committees, and directors. SOX …show more content…
However, after the first year, companies identified the benefits of a better understanding of design and increased effectiveness and efficiency of operations and personnel (Maleski, 2012). SOX has helped companies go through a traditional route of growth and maturing because of the increased duties supplied from the Act. Section 404 of SOX imposes the requirement that companies must hire third-party independent auditors to assess their internal controls. Because of this, there are individuals who say they never really understood their business until this happened therefore it allowed business people a better understanding along with the wants of making better choices. Among other measures, SOX extended the statute of limitations for the SEC to pursue actions and increased penalties at their disposal. SOX changed the balance of power between companies and prosecutors, putting prosecutors in the driver’s seat (Maleski, 2012). With the disclosures made clear and the facts of what is required of public companies, it is easier for agency’s to pursue enforcement. The core values when making disclosures have become clear since SOX extended the statute of …show more content…
Knowingly or willfully failing to retain audit work-papers in violation of new U.S.C. Section 1520 or SEC rules pertaining thereto, with a penalty of fine and/or up to 10 years imprisonment. Section 1520, added by Section 802. 6. A CEO’s or CFO’s making a certification under new U.S.C. section 1350 known to be false, with penalty of up to a $1 million fine and/or 10 years imprisonment, or up to $5 million fine and/or 20 years imprisonment if done willfully. Section 1350, added by Section 906. 7. Knowingly retaliating against an informant for providing, to law enforcement officer truthful information, with penalty of fine and/or up to 10 years imprisonment. Section 1513, added by Section 1107.
The Sarbanes-Oxley Act has made a profound difference in the business world.
Although the criminal provisions have not been well-received because of the complaints that they are needlessly redundant, the face of crime in business has decreased. With the number of fraud defendants who actually receive prison time, opposed to probation increasing, it is believed that they provisions have done more good than harm. This allows individuals to make better choices and ethical decisions based on the outcome in which one knows they will receive.
References
Maleski, M. (2012). Inside Counsel Magazine. Retrieved