Describe the Sarbanes-Oxley Act. Why was the act enacted? What is the impact? Do you think it will stop accounting corruption? Why or why not?
Writing assignment 500 words (NO PLAGIARIZE). Please help I know nothing about this topic.
| Answer |
| Describe the Sarbanes-Oxley Act. Why was the act enacted? |
| Sarbanes Oxley Act 2002 is created to stop the corporate world fraud. It is there to protect the whistleblowers,investors , to bring transparency in the entities , to strengthens the independence and financial position of the corporates. There are set of rules and regulation set by the board. The law was made specifically for Public listed company but it grabs the non profit making entitles also |
| During the beinging of year 2001 to 2002 , various co corporate frauds were identified in the companies like Enron, Tyco etc. Big frauds were found in term of loss of monetary interest and loss of public trust. To prevent all suck fraud and enhance the transparency in financial conduct of the corporate the Act was introduced. It basically introduce to protect the interest of all interested stakeholder in the company. It is mainly to protects the shareholder interest, employees and public from the fraudulent financial activity. Due to big fraud of Enron Corp. public , employees and investor loss the trust as there were many fraudulent activity was conducted by the firm. They conducted the fraudulent financial activity due to the unethical behaviour of management and due to there personal benefit. Conflict of interest were observed between conduct of work. |
| What is the impact? Do you think it will stop accounting corruption? Why or why not? |
| Due to implementation of Act , many reporting requiredement are now changed. More transparent reporting criteria are set for auditor ,management. Companies that have implemented the Act rules and regulation are accepted to be more aware of the actual working condition of there own companies. Now for all companies CFO should review the financial statement himself independently. Also the strict requiredement of internal and external audit is required. Management of the company is responsible for true and fair view of financial statement of the company . Perdicocally the management is required to review the internal control, its operating effectiveness. Also the Act have implemented penalty for non disclosure of important provision and protection is given to whistle blowers . |
| All above points have lead to correct reporting of financial position of the corporation on timely manner. |
| Yes , it has stop the corruption to the great extent. Now management of companies and its auditors are independent, so the reporting issue is not anymore in existence |
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