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What will be a good abstract of the 2002 Sarbanes-Oxley Act and the financial scandal that...

What will be a good abstract of the 2002 Sarbanes-Oxley Act and the financial scandal that happened?

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  • After the financial scandal in US from 2000 to 2002, Sarbanes-Oxley Act was introduced in July 2002 for regaining the confidence of investors in the financial market and preventing loopholes.The Sarbanes-Oxley Act also imposes stricter penalties for frauds and implements changes in presentation of financial statements.
  • The Sarbanes-Oxley Act was formed by Congress to prevent frauds and mis practices done to fool investors. To improve financial statements, disclosure requirements like off balance sheet disclosures were imposed.
  • One important aspect of this act in corporate governance is enhancing of public audit committees. Audit committees are formed with non managerial personnel and they approve audit and non audit, handle complaints of errors in management accounting and supervise external auditors.
  • Sarbanes-Oxley enhances  management's responsibilities towards financial reporting. If a director or manager does security law violation, he will not be employed in the same post again.
  • The Sarbanes-Oxley Act implemented certain disclosure requirements. Insiders must report their stock details to Security and Exchange commission within two business days of transformation.
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