Sox Act
The Sarbanes-Oxley Act of 2002
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Introduction
The numerous scandals that involved corporate and investors in the year 2002 such as Enron, WorldCom and Tyco came as shock to many investors in the United States. Many investors lost their money to fraudulent activities by accountability corporate making them loose confidence in financial statements provided. Such loses created concern within the government prompting them to overhaul all the existing regulatory standards to come up with new ones to restore the confidence of the investors. This paper aims to discuss those new regulatory rules; famously known as Sarbanes-Oxley Act to establish the effect they have created so far on the economy in general.
This was an act that was passed into law in 2002 by the United States congress to protect American investors from fraudulent American activities by corporations in response to the scandals that were seen in the early 2000s (United States Securities and Exchange Commission 2009). This act created new standards to be followed by corporate accountability in the USA and new penalties in case a corporate agency was involved in frauds. This act came with new specifics on financial reporting responsibilities such as strict adherence to new internal procedures and controls that were formulated to ensure that all financial records were accurate and valid. By improving the accuracy and reliability of all disclosures by corporate, the act affirmed that all investors were protected as per the security laws.
Key Components
Section 302: Disclosure Controls
This section provides provisions that mandate a set of procedures that are internal designed to ensure that all financial disclosures are accurate. The signing officers should certify that they hold responsibility for the establishment and maintenance of all internal controls and confirm that they have created those internal controls in order to
Name
Tutor
Institution
Course
Date
Introduction
The numerous scandals that involved corporate and investors in the year 2002 such as Enron, WorldCom and Tyco came as shock to many investors in the United States. Many investors lost their money to fraudulent activities by accountability corporate making them loose confidence in financial statements provided. Such loses created concern within the government prompting them to overhaul all the existing regulatory standards to come up with new ones to restore the confidence of the investors. This paper aims to discuss those new regulatory rules; famously known as Sarbanes-Oxley Act to establish the effect they have created so far on the economy in general.
This was an act that was passed into law in 2002 by the United States congress to protect American investors from fraudulent American activities by corporations in response to the scandals that were seen in the early 2000s (United States Securities and Exchange Commission 2009). This act created new standards to be followed by corporate accountability in the USA and new penalties in case a corporate agency was involved in frauds. This act came with new specifics on financial reporting responsibilities such as strict adherence to new internal procedures and controls that were formulated to ensure that all financial records were accurate and valid. By improving the accuracy and reliability of all disclosures by corporate, the act affirmed that all investors were protected as per the security laws.
Key Components
Section 302: Disclosure Controls
This section provides provisions that mandate a set of procedures that are internal designed to ensure that all financial disclosures are accurate. The signing officers should certify that they hold responsibility for the establishment and maintenance of all internal controls and confirm that they have created those internal controls in order to
References: United States Securities and Exchange Commission (September 2009). Study of the Sarbanes-Oxley Act of 2002 Section 404; Internal Control over Financial Reporting Requirements. Retrieved from http://www.sec.gov/news/studies/2009/sox-404_study.pdf Price Water House Coopers. The Sarbanes-Oxley Act of 2002. Retrieved from http://www.pwc.com/en_US/us/sarbanes-oxley/assets/final_so_wp_2-boardsac.pdf “Corporate Governance. The Wall Street Journal Reports.” Wall Street Journal, February 24, 2003. United States., & LexisNexis (Firm). (2002). The Sarbanes-Oxley Act of 2002: With analysis. Newark, NJ: LexisNexis/Matthew Bender. Jones, S. D. (January 01, 2005). The Sarbanes-Oxley Act. International Corporate Rescue, 2, 3, 153-155.