Question

Topic: Financial scandal that took place prior to the Sarbanes-Oxley Act (SOX) of 2002

Question: Impact of Sarbanes-Oxley--(Could this same type of financial scandal happen again now that SOX has been enacted, why or why not? Be sure to discuss this from what happened in terms of better/stricter internal controls and regulations that are now in place)

you can pick any question for me to relate about the assignment? explain as many words you want to help me understand the topic

Answer 1

The SOX Act 2002 was enacted as a reaction to major corporate and accounting scandals which cost the investors billions of dollars as the share price collapsed. As a result the confidence in Stock market was shaken to its core. Since the Act came in to force, similar financial scandals will and have come down largely, because of two main reasons:

1. The law supplements and further strengthens all existing rules & regulations of the SEC. So, there is no loophole between applying one regulation and getting a freehand from the other.

2. The law takes into account four principal areas i.e Corporate Responsibility (of companies towards the shareholders and the other stakeholders), increased criminal punishment (against the officers who sign the Financial statements which are the only guide available to investors in the public domain), accounting regulation (establishing internal auditing and management controls and requirements of IT departments to store the specific records) and new protections (over and above the ones in the SEC provisions).

Major provisions of this act are referred by the names of the sections i.e. 302, 404 & 802.