The Sarbanes-Oxley Act
Summary :
Table of Contents
- Introduction.
- The origins and factors of the Sarbanes-Oxley Act.
- A general context of failures.
- The implementation of SOX to avoid any conflict of interests.
- The manipulation of banking and corporate practices.
- The contents of the Sarbanes-Oxley Act.
- Auditor independence and internal control.
- Corporate governance and accountability.
- Financial disclosure and financial reporting.
- The benefits & costs of the Sarbanes Oxley-Act.
- The benefits.
- The costs.
- Conclusion.
- References.
Abstract
On July 30, 2002, President Bush signed into law a revolutionary act: the sarbanes-oxley act, also known as the Public Company Accounting Reform and Investor Protection act. In the wake of many financial scandals, this law establishes new accounting and control requirements on U.S. publicly owned companies. Administrated by the Securities and Exchange Commission, it aims at safeguarding against fraudulent accounting, protecting shareholders, and requires CEOs and CFOs to certify the accuracy and truthfulness of the accounts. Enron, WorldCom, Tyco International, Adelphia, and many others: all are known for highly-publicized frauds that resulted in $500 billion in the declines of share prices. In each of these scandals, the senior management did not behave ethically, which led to the misstatement of earnings and hit the confidence of investors.
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