Sarbane-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002
Presented by:
Ibrahim M. Conteh; Ruby Proctor Garcia; Kathleen M. Parry;
Joseph M. Schmerling; Jaime Ulloa
Auditing Theory and Practice
0902 ACCT422 4021
Due: April 29, 2009
Table of Contents
Page Number
What is the Sarbanes-Oxley Act of 2002? 3
Why was SOX established? 4
When did SOX take effect? 5
What companies were affected and how? 6
What does SOX compliance require? 9
Conclusion 11
References 13
What is the Sarbanes-Oxley Act of 2002?
The Sarbanes-Oxley Act of 2002 – its official name being “Public Company Accounting Reform and Investor Protection Act of 2002” – is recognized to be the most significant U.S. federal disclosure and corporate governance legislation since the Securities Act of 1933 (the Securities Act) and the Securities Exchange Act of 1934 (the Exchange Act), and, the provisions of the Act are significant enough that it is considered by many to be the most significant change to federal securities laws in the U.S. since the New Deal.
It is best understood, however, not as a piece of legislation centered on a new concept of regulation, but as a process which mandated that many major reforms be implemented as soon as possible (in some cases, within 30 days) on the precise schedule specified by Congress. In that sense, the Enron and WorldCom debacles provided the impetus of public outrage that forced into effect some of the most readily available reform proposals for publicly traded companies, many of which had existed for years without sufficient political imperative to be enacted.[1]
The Act provides for new levels of auditor independence; personal accountability for CEOs and CFOs; additional accountability for corporate Boards; increased criminal and civil penalties for securities violations; increased disclosure regarding executive compensation, insider trading and financial statements; and certification of internal audit work by external auditors.[2]
Why was
The Sarbanes-Oxley Act of 2002
Presented by:
Ibrahim M. Conteh; Ruby Proctor Garcia; Kathleen M. Parry;
Joseph M. Schmerling; Jaime Ulloa
Auditing Theory and Practice
0902 ACCT422 4021
Due: April 29, 2009
Table of Contents
Page Number
What is the Sarbanes-Oxley Act of 2002? 3
Why was SOX established? 4
When did SOX take effect? 5
What companies were affected and how? 6
What does SOX compliance require? 9
Conclusion 11
References 13
What is the Sarbanes-Oxley Act of 2002?
The Sarbanes-Oxley Act of 2002 – its official name being “Public Company Accounting Reform and Investor Protection Act of 2002” – is recognized to be the most significant U.S. federal disclosure and corporate governance legislation since the Securities Act of 1933 (the Securities Act) and the Securities Exchange Act of 1934 (the Exchange Act), and, the provisions of the Act are significant enough that it is considered by many to be the most significant change to federal securities laws in the U.S. since the New Deal.
It is best understood, however, not as a piece of legislation centered on a new concept of regulation, but as a process which mandated that many major reforms be implemented as soon as possible (in some cases, within 30 days) on the precise schedule specified by Congress. In that sense, the Enron and WorldCom debacles provided the impetus of public outrage that forced into effect some of the most readily available reform proposals for publicly traded companies, many of which had existed for years without sufficient political imperative to be enacted.[1]
The Act provides for new levels of auditor independence; personal accountability for CEOs and CFOs; additional accountability for corporate Boards; increased criminal and civil penalties for securities violations; increased disclosure regarding executive compensation, insider trading and financial statements; and certification of internal audit work by external auditors.[2]
Why was
References: CIO magazine. “SEC/Sarbanes Oxley Changes to Give Small Public Firms a Break.” December 11, 2006. Accessed April 1, 2009 from: http://www.cio.com/. Kochems, Alane. “Who’s on First? A Strategy for Protection Critical Infrastructure. May 5, 2005. Accessed April 9, 2009 from: The Hertiage Foundation website at http://www.heritage.org/research/homelandsecurity/bg1851.cfm. The Institute of Internal Auditors. “The Sarbanes-Oxley Act of 2002: Effect on Audit Committees at Publicly Traded Companies.” January 2004. Assessed April 1, 2009 from: http://www.theiia.org/. The Institute of Internal Auditors. “The Sarbanes-Oxley Act of 2002: Effect on Audit Committees at Organizations Not Publicly Traded.” January 2004. Accessed April 1, 2009 from: http://www.itaudit.org/. The National Council of Nonprofit Organizations. “Learning from Sarbanes-Oxley: A Checklist for Nonprofits and Foundations”. June 2004. Assessed April 1, 2009 from: http://www.councilofnonprofits.org/. PCAOB. “Auditing Standard No. 3 – Audit Documentation.” June 9, 2004. Accessed April 1, 2009 from: http://www.pcaobus.org/. PCAOB. “Conforming Amendments to PCAOB Auditing Standards: Amendment to Auditing Standard No. 3 resulting from Auditing Standard No. 5.” August 25, 2004. Accessed April 1, 2009 from: http://www.pcaobus.org/. The U.S. General Accounting Office. “Sarbanes-Oxley Act: Consideration of Key Principles Needed in Addressing Implementation for Smaller Public Companies.” GAO-06-361, April 13, 2006. Accessed April 1, 2009 from: http://www.gao.gov/. Wright, George W. “Postal Service readies for Sarbanes-Oxley Act.” February 4, 2008. Accessed April 1, 2009 from: http://federaltimes.com/index.php?S=3348921. [2] The Institute of Internal Auditors. “The Sarbanes-Oxley Act of 2002: Effect on Audit Committees at Organizations Not Publicly Traded.” January 2004. Accessed April 1, 2009 from: http://www.itaudit.org/ [3] CIO magazine [4] The Institute of Internal Auditors. “The Sarbanes-Oxley Act of 2002: Effect on Audit Committees at Organizations Not Publicly Traded.” January 2004. Accessed April 1, 2009 from: http://www.itaudit.org/ [5] The Institute of Internal Auditors [6] The National Council of Nonprofit Organizations. “Learning from Sarbanes-Oxley: A Checklist for Nonprofits and Foundations”. June 2004. Assessed April 1, 2009 from: http://www.councilofnonprofits.org/ [7] Wright, George W. “Postal Service readies for Sarbanes-Oxley Act.” February 4, 2008. Accessed April 1, 2009 from: http://federaltimes.com/index.php?S=3348921. [8] Kochems, Alane. “Who’s on First? A Strategy for Protection Critical Infrastructure. May 5, 2005. Accessed April 9, 2009 from: The Hertiage Foundation website at http://www.heritage.org/research/homelandsecurity/bg1851.cfm [9] PCAOB [10] Kochems, Alane. “Who’s on First? A Strategy for Protection Critical Infrastructure. May 5, 2005. Accessed April 9, 2009 from: The Hertiage Foundation website at http://www.heritage.org/research/homelandsecurity/bg1851.cfm. [11] The U.S. General Accounting Office. “Sarbanes-Oxley Act: Consideration of Key Principles Needed in Addressing Implementation for Smaller Public Companies.” GAO-06-361, April 13, 2006. Accessed April 1, 2009 from: http://www.gao.gov/. [12] CIO magazine. “SEC/Sarbanes Oxley Changes to Give Small Public Firms a Break.” December 11, 2006. Accessed April 1, 2009 from: http://www.cio.com/