Question

6. What has been the SEC's role in the evolution of the rule-making process? How has that role changed since the passage of SOX?

Answer 1

ANSWER:

what has been SEC's role in the evolution of the rule-making process? How has this role changed since the passage of SOX?

In the rule making process, SEC never played a direct role and acted as a behind-the-scenes observer. It has played a definite role in practically all standards, however has prefereed to take a low profile in majority of the situations but always made sure that there is an impact of SEC in rule making process. SEC has always preferred to be out of lime light until SOX, also known as Sarbanes-Oxley strengthened SEC’s authority. Although Public Company Accounting Oversight Board (PCAOB) takes care of the accounting and auditing, SEC holds the ultimate authority to change or approval the auditing and accounting standards and policies. Previously Financial Accounting Standards Board ( FASB ) used to have donations from the corporations however now SEC have to give the budget approval for FASB. From the year 2007 onwards Financial Accounting Board (FAF) provides authority to SEC for having the input to board member appointments of FASB. These are the many changed that has been occurred since the passage of SOX. The SOX was designed to improve the reliability of financial reporting and to improve audit quality. The SOX Act changed several rules for Tax professionals. The main motive behind changing all the rules was to reduce the chances of any wrongdoing and fraudulent acts that can damage the interest of the investors and creditors due to the misstatement of financial statements