Question

The director of your accounting department has requested that you conduct research on the Sarbanes- Oxley Act of 2002 (SOX) where you are to summarize the effects SOX has had on improving corporate governance. In addition, research, identify, and summarize a specific corporate crime case or issue. The summary should include a good description of the facts of the case, the issue before the court, the legal reasoning and decision or outcome (court's ruling) of the case, if there is one. Lastly, state whether SOX has created more or less confidence in the capital markets.

Answer 1

SOx audit has excellent advantages as follows:

1. Improved access to capital markets
2. Better transparency for financial investors
3. Reduced cost of capital
4. Effectiveness in fraud management

Recently case against Goldman Sachs Senior Executive on Insider Training caused huge reputation loss and the US court cinvicted him on four felony charges in the Insider trading case. The executive shared financial and intricate information about company before investors well ahead of financial reports.

Had SOx audits been in place such conspiracy would have been easily bifurcated and bypassed using strong controls and regulations inside organisation. Hence it straightly brings transparency and great confidence in capital markets.