Question

What was the impact the Sarbane Oxley Act had held on large publicized U.S Corporation, the management of those corporations, the board of directors, the independent auditor and the investing people?

Answer 1

the impact the Sarbanes Oxley Act had held on large publicized U.S Corporation,

the management of those corporations,

the board of directors,

the independent auditor and the investing people

Sarbanes Oxley Act ( short form SOX) influenced Public business through transformation of the financial statement .

Primary changes – creation of the Public Company Accounting Oversight Board ( PCAOB) , The assessment of personal liability to personnel liability to Auditors , executive and Board members and creation of section 404.

Implemented Internal control system , which was never exist earlier .

Impact on Investor – Confidence back among Investor and the law aimed to cut short opportunity for companies to defraud Institutional and individual Investors

SOX changes management responsibility for Financial reporting significantly. As per act , top management personally certify the accuracy of financial report . any fraud or misrepresentation by Top management, then they will face 10-20 years in Prison .

As per SOX , all public companies must disclose any material Off Balance sheet arrangements .

The audit committee received wide range of leverage in overseeing the top management’s account decision . The audit committee, a subset of the Board of director consisting non management members , gained new responsibilities to see top management financial decision and selecting of External Auditor

SOX implemented certain corporate procedure – like : The Board will not grant loans to corporate officer . The corporate financial must be certified by both CFO and CEO.

SOX also promotes the disclosure of corporate fraud by protecting whistle blower employees of publicly traded companies

SOX reformed and re empowered the board of director of the Corporate . Under SOX environment , management is working with for the Board .SOX encouraged the adoption of corporate code of ethics .

SOX laid the cultural roots od shareholders activities.

Special emphasis must be placed on the accountability of the board of directors towards the shareholders and their independence from Management .