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Sarbanes-Oxley Act (SOA) Essay

… " The authors offer a third reason why firms should not desert the public milieu, and that is because "…public ownership leads to positive social externalities" which could be lost to the stakeholders once a firm decides going private is a better idea (Verleun).

In general, Verleun and colleagues in this article point out that subsequent to the passage of SOA, firms are much more conservative in their accounting and reporting of earnings. Indeed high-tech firms have shown a greater degree of accounting conservatism than "low-tech firms." Two reasons for that could be because: a) "…the higher volatility of high-tech stocks makes these firms more vulnerable to shareholder litigation"; and b) high-tech firms seem to attract more attention from analysts "…because of their high growth…. [read more]

Sarbanes-Oxley Act Research Paper

… " (Sox-Law, 2003, p.1)

Section 404

Section 404 of the Sarbanes-Oxley Act is reported to make a requirement that issuers must publish information in their annual reports in regards to the "cope and adequacy of the internal control structure and procedures for financial reporting." (Sox-Law, 2003, p.1) This statement is required to include information on the "effectiveness of such internal controls and procedures." (Sox-Law, 2003, p.1) Finally, the registered accounting firm is required to "attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting." (Sox-Law, 2003, p.1)

Section 409

Section 409 of the Sarbanes-Oxley Act states that there is a requirement for public disclosure by issuers "on an urgent basis, information on material changes in…. [read more]

Sarbanes-Oxley Act 2002 Term Paper

… Sarbanes-Oxley Act 2002 is also known as Public Company Accounting Reform and Investor Protection Act of 2002 and is most commonly called SOX or Sarbox. On July 30, 2002 the Act was introduced from United States federal law got a response with various numbers of major corporate and accounting scandals, which were affecting Enron, Peregrine Systems, WorldCom and Tyco International. In result, there was a decline in public trust for accounting and also reporting practices. Sarbanes-Oxley Act is named after the sponsors of the Senator Paul Sarbanes and the representative Michael G. Oxley. It was also planned to punish the corporate and fraud for accounting plus corruption as well which ensure the justice for the people with strong behaviors and to protect the workers and…. [read more]

Sarbanes-Oxley Act Evaluating the Effectiveness Essay

… The board is responsible for the licensing of the firms that provide audit services.

Secondly, it is charged with the mandate to establish the auditing quality control, the ethics and other related standards for the public audit firms. The PCAOB has authority to set the specific standards that govern how the auditors carry out their responsibilities. It has significantly impacted the conduct of the auditing firms and the more the professional conduct and ethics of the individuals who do the audit works (Welytok, 2006).

Moreover, the board is mandated to conduct inspections and investigations on the proceedings of the registered accounts firms as well as the disciplinary practices of the firms (Fletcher & Plette, 2008). The board ensures that these organizations are compliant to the…. [read more]

Sarbanes-Oxley Act of 2002 Administration Essay

… The business community cites that there is hardly any economic consequence of compliance. Besides, the Financial Executives International undertook a survey of 224 companies regarding the direct costs involved in becoming Sec 404 of SOX compliant. The result of the survey revealed that the average first-year cost estimate of nearly $3 million for almost 26,000 hours of internal duties and 5000 hours of external work. (Zhang, 2005)

Besides additional audit fees of $823,200 is involved that translates to a rise of 53%. While additional costs are normally regarded as substantial, they are possibly inundated by the opportunity costs of resources and the likely intense effect of SOX on business practices. This apart, the Act puts Executives to more degree of litigation risk as also harsher…. [read more]

Sarbanes-Oxley Act Term Paper

… The Board also has the authority to investigate firms who are perceived to be in violation of a certain act, rules or provision.

The New Public Company Accounting Oversight Board (PCAOB) will be required to cooperate with professional accountant groups and advisory groups to increase the effectiveness of the standards setting process.

The Effect of Sarbanes-Oxley on the Accounting Profession

In addition to the mandates outlined above, Sarbanes-Oxley Act allows for additional provisions that seek to prevent conflicts of interests that can be a precursor to corporate corruption. The Act bans what is known as the "revolving door," prohibiting registered CPA firms from auditing any SEC registered client whose chief executive, CFO, controller or equivalent was on the audit team of the firm within the…. [read more]

SOX the Sarbanes-Oxley Act (SOX) Term Paper

… In that way, the accounting profession has been forced to take greater responsibility for its role in the economic system and has been given the tools to do this.


I believe that the accounting profession is better off being government-regulated, for two reasons. The first is that the objective of accounting and auditing for public companies is to ensure that trustworthiness of the country's investment system. This objective is greater than any one accounting firm or corporate client. When confidence in the investment system is compromised, firms find it more difficult to raise the capital they need. This in turn harms growth, innovation and the economy as a whole. That confidence in the accounting system has an effect on the GDP makes it a…. [read more]

Sarbanes-Oxley Act : 2002 Research Paper

… There is no sign that these second associate opinions provided any assistance in avoiding audit failure. In the same way, the traditional audit failures of previous times cannot be linked with deficiencies in inner management. The best inner management system can easily be rendered worthless by top management frauds and collusion. The underlying causes of failed audits are more correctly linked with gross offenses of audit techniques rather than two deficiencies in management's inner control framework (Fletcher & Plette, 2008).

While taking into account the regulating factors of the SOA, I was hit by the precautionary characteristic of this Act. PCAOB examinations of public auditors, development and administration of strict audit requirements and the powerful separation between the consulting and auditing functions of accounting organizations…. [read more]

Sarbanes-Oxley Act of 2002 and Impacts Term Paper

… Sarbanes-Oxley Act of 2002 and Impacts on Post and Pre-Using Case Examples as References

Sarbanes-Oxley Act of 2002

During the past few decades, the number of white-collar business fraud cases seemed to increase dramatically. Due to an immense interest and press investigations, these crimes were brought to the publics' attention, causing them to lose their confidence in the fairness of business actions. In July 2002, Senator Paul Sarbanes and Representative Michael G. Oxley presented the American Senate with the Public Company Accounting Reform and Investor Protection Act of 2002.

Also known as SOX or SarBox, the Sarbanes-Oxley Act "establishes a new quasi-public agency, the Public Company Accounting Oversight Board, which is charged with overseeing, regulating, inspecting, and disciplining accounting firms in their roles as auditors…. [read more]

Sarbanes-Oxley Act of 2002 Was Intended Research Paper

… Sarbanes-Oxley Act of 2002 was intended to help investors be more certain of the steps they take while relying on a particular organization. There has been mixed reviews on how the act has impacted different corporations. While its application is important to most businesses, the cost factor overrides the advantages in some areas. This paper deals with defining the structure of the act and overall effect which the act has had on organizations. It demonstrates the extent to which smaller public companies are influenced by the rules stated in the act and the reaction of the Securities and Exchange Commission (SEC) to the responses received from these smaller companies. It also shows how the non-profit organizations such as universities are dealing with the compliance issues…. [read more]

Sarbanes-Oxley Act Prior to the Enactment Term Paper

… Sarbanes-Oxley Act

Prior to the enactment of the Sarbanes-Oxley Act (SOX) several large corporate accounting scandals had plagued corporate America. Of these, the most publicized were Enron, WorldCom and Tyco. These events rocked the financial world to the core, shaking investor confidence, and highlighting several significant problems in the accounting industry. In response, SOX was created to put tighter controls on public corporations, with the creation of the Public Company Accounting Oversight Board (PCAOB) and covering issues including: corporate governance, auditor independence, internal controls, and enhanced financial disclosure.

The Events Leading up to Sarbanes-Oxley:

The Enron Corporation scandal revealed fraudulent accounting procedures that caused the company's stock to plummet and forced the company into bankruptcy. The fallout from this negatively affected everyone from employees to…. [read more]

Sarbanes-Oxley Act Term Paper

… "

These protections include criminal provisions against anyone who "takes any action harmful to any person," including any "interference with the lawful employment or livelihood of the person," for providing "truthful information" to a "law enforcement officer."

Indeed, this provision has so much teeth that an individual found guilty of "harmful action" toward a whistleblower may face as much as ten years in prison -- hardly a slap on the wrist. Further, even if the information that the whistleblower provides turns out to be incorrect, as long as he or she can show that they "reasonably believed" their allegation, the employer or any other company agent cannot act against them.

Indeed, many consider this rather innocent-looking prevision of the Act to be the real "teeth"…. [read more]

Sarbanes-Oxley Act of 2002 Literature Review

… These firms have very few meetings of audit committees, they have very few directors who are independent, their audit committees have very few experts present, and they have CEOs who are also the Chairmen of the boards. While on the other hand the firms with strong corporate governance are prone to have consistent as well as positive results.

Abbott et al. (2004) have presented the impact of the characteristics of audit committee on the financial statements. This means that the more the audit committee is competent, independent, and full of experts, the lesser would be the chances of fraud to occur which will decrease the percentage of negativity on corporate earnings as well as increase shareholder confidence. The authors worked on two different groups, one…. [read more]

Sarbanes-Oxley Act on Auditing Changes Research Paper

… This particular reform significantly improved the transparency and independence of the reporting process. A study of the contents of the audit committee reports from the 2003 and 2004 proxy statements of 100 randomly selected companies listed on the NYSE found significant improvements in terms of the "clear identification of the financial experts on the committee; a definitive conclusion about the independence of the auditor; and a disclosure about the policy regarding the preapproval of nonaudit services" (Pandit, Subrahmanyam, & Conway 2005).

Critics of Sarbanes-Oxley said that the Act's main beneficiaries were audit firms, which experienced a boom in business as companies had to comply with its more complicated reporting requirements. Additionally, some critics said that the change in the mentality of many firms and the…. [read more]

Sarbanes-Oxley Act Significant Reasons Term Paper

… ¶ … Sarbanes-Oxley Act

Significant Reasons why the Sarbanes-Oxley Act can Improve the Validity of Financial Statements

Since the Sarbanes-Oxley Act was signed and enacted, there have been confirmations from different companies and offices involved in the validation of financial statements that the legality of financial statements in corporate governance and submitted by companies are legitimate and genuine. Contributing to this improvement are the rules and provisions that the Sarbanes-Oxley act states.

First of all, the penalties that the Sarbanes-Oxley Act poses to violators are among the foremost reasons why the act is likely to improve the validity of financial statements. Individuals and companies will be fine with millions of dollars should they violate laws under the act. Secondly, with the purpose of the Sarbanes-Oxley…. [read more]

Enron and Sarbanes Oxley Act Term Paper

… Sarbanes-Oxley Act was implemented in 2002 in the wake of major corporate scandals such as Enron and WorldCom. The act, which contains eleven sections, creates additional responsibilities for the corporate boards, as well as criminal penalties for corporate irresponsibility. It also has required the SEC to implement rulings on the requirements of complying with SOX. Many believe that this legislation is critical for promoting continued public trust of accounting practices within the United States. However, the real affect of SOX has yet to be determined due to the heavy burden that it has placed on companies in order to comply with the transparency within accounting. A more crucial understanding of SOX can be learned by understanding how the legislation and its implications would have affected…. [read more]

Spending at Utilities Given Sarbanes Oxley Act Research Paper

… ¶ … Sarbanes-Oxley and why did it become law? The Sarbanes-Oxley Act of 2002 (SOX) was put into law in 2002 as a result of the shocking financial scandals in the 20th century and early in the 21st century. The Enron collapse, caused by corruption, an egregious lack of oversight by auditors, and greed, along with the scandals at WorldCom, Peregrine Systems, Tyco International and Adelphia, all contributed to Congress creating legislation to beef up the credibility and the framework of publicly held companies.

The SOX was put together by Democrat Senator Paul Sarbanes of Maryland, and Republican Representative Michael G. Oxley of Ohio. The bill, signed into law by President George W. Bush on July 30, 2002, provides new or greatly enhanced standards for…. [read more]

Sarbanes-oxley. The Political Pressure Term Paper

… And last of all, the Securities and Exchange Commission was established.

The law was often referred to as the "truth in securities" law. According to the SEC's web site, the Securities Act of 1933 has two basic objectives:

require that investors receive financial and other significant information concerning securities being offered for public sale; and prohibit deceit, misrepresentations, and other fraud in the sale of securities.

This act was partly authored, ironically, by Joseph Kennedy, who was considered an expert in that he had made much of his money illegitimately through the sale of liquor. Although regulation enjoyed broad-based support, it had its opponents. The most prominent among them was the president of the New York Stock Exchange. However, he was soon silenced when it…. [read more]

Sarbanes-Oxley Impact on Auditing Thesis

… Sarbanes-Oxley Impact on Auditing

The Impact of the Sarbanes-Oxley Act on the Auditing Profession

The accumulated effects of government-defined compliance legislation on the auditing profession has created significantly greater opportunities for providing services, yet has also introduced an entirely new and higher level of complexity as a result. The intent of this paper is to evaluate how the Sarbanes-Oxley Act (2002) is influencing the auditing profession specifically concentrating on how the advantages and disadvantages of the Sarbanes-Oxley Act (SOX) (2002) are impacting this profession today and in the future.

Despite the significant growth of Governance, Risk and Compliance (GRC) as a framework for ensuring corporate-wide compliance to government-based reporting and auditing, there still exists significant variation between actual auditing practices and performance to standards (Jelinek,…. [read more]

Sarbanes-Oxley Act Essay

… d.).

In light of recent corporate accounting failures, Section 406 is an important area of the Sarbanes-Oxley Act because it deals with some of the factors that contribute to such incidents. Most of these corporate accounting failures were partly brought by unethical practices with regards to financial accounting and reporting. Some of the major examples of these incidents that show the need for effective ethical standards include the Enron Scandal, which was brought by audit failure involving several executives at the firm who were found guilty of unethical executive compensation. The second example is Tyco scandal in which the Chief Executive Officer improperly used the company's funds and used inappropriate merger accounting practices. Since the incidents originated from unethical practices by senior financial officers, they…. [read more]

Sarbanes Oxley Act Book Report

… SOX Compliance

How the Sarbanes-Oxley Act Relates to Internal Controls

The impacts of the Sarbanes-Oxley Act (SOX) of 2002 on the internal controls of businesses that are publically traded on U.S.-based stock exchanges continue to be costly, significant and strategic in their impact. Most significant have been the requirement of supporting real-time reporting to the Securities and Exchange Commission (SEC) through the use of the evolving XBRL data integration standard and the supporting processes and systems re-engineering needed to accomplish this (Devonish-Mills, 2007). At a more fundamental level, SOX has completely redefined the underlying accounting and finance systems of companies, often requiring entirely new system integration, process re-definition and reporting processes and reviews to be in place (Hemani, 2005). Market research firm Gartner Inc. said…. [read more]

Sarbanes-Oxley Act While Most Americans Term Paper

… The means accountants who know a company well and can sense something amiss even before finding it will be replaced with auditors unfamiliar with the ebb and flow of the company (Criminalizing business 2002). That is tailor made for companies that really do have something to hide, but all companies are likely to act furtively anyway.

The article concludes, "The most egregious fault of Sarbanes-Oxley is the act's supposition that executives and accountants are crooks requiring government repression at all costs .... To be incorporated in the U.S. is proving to be a fatal business disadvantage" (Criminalizing business 2002; Bad stock market medicine 2002).

That may be the most egregious fault, but there are other unfortunate results as well, including the construction of a brand-new…. [read more]

Sarbanes Oxley Act and Corporate Governance Term Paper

… Sarbanes-Oxley Act & Corporate Governance

The Sarbanes-Oxley Act, also known as the Public Company Accounting Reform and Investor Protection Act of 2002, was enacted on July 30, 2002, as a response to a plethora of accounting scandals that had recently plagued corporate America.

Powerful companies such as Tyco International, Enron, Adelphia, and WorldCom had fraudulently adjusted financial records that ended up costing shareholders billions of dollars, when the truth came to light and their stock prices plummeted. Sarbanes-Oxley is one of the most comprehensive pieces of accounting reforms, since the days of Franklin D. Roosevelt (Bumiller, 2002; Wegman, 2007). The aims of this legislature was to prevent future fraudulent corporate finance reporting, by tightening corporate governance regulations (Grumet, 2007).

Sarbanes-Oxley Act & Corporate Governance

Introduction:…. [read more]

Positives and Negatives of Sarbanes-Oxley Essay

… ("Do the Benefits of Sarbanes-Oxley Justify the Costs," 2012)

How has Sarbanes-Oxley Changed Financial Reporting?

As a result, this has changed the way that firms are reporting their financial information to regulators and the general public. What is taking place, is most publically traded companies have been forced to: increase the size of their accounting, legal and compliance departments. This is because there are added requirements that will be discussed, to ensure that the company is in compliance with various provisions of the law. ("Do the Benefits of Sarbanes-Oxley Justify the Costs," 2012) ("Sarbanes-Oxley Socking Private Companies," 2005)

How well has Sarbanes-Oxley worked?

In general, Sarbanes-Oxley has provided mixed results. This is because select elements of the law are offering greater amounts of oversight and…. [read more]

Sarbanes-Oxley Act of 2002 Essay

… Today IT systems have automated many of the business functions that once upon a time took a whole office full of people to administer (Pele-Sol, 2011). Thus the need for compliance to build in to record keeping is the first line of defense to compliance needs. Yet some of the IT professionals are not well knowledgeable about SOX issues or the concepts of internal control. However, the IT controls are very important in complying with the SOX directives; especially in the electronic age. The controls over the IT systems the users access, business process design, limiting and controlling access, the security and integrity of data, and the controls that administer the use of the system have all to be taken into account in redesigning the…. [read more]

Affordable Care Act Impact on Businesses Term Paper

… Affordable Care Act is being rolled out at this time and will have been completely rolled-out by sometime in 2014. Under this Act, employers over 50 FTEs will be forced to either provide adequate and affordable health care coverage for their employees or pay a responsibility fee. The company needs to examine our options, both from a financial perspective and from a recruitment and retention perspective when weighing which of these options is best for our company. Other issues include the creation of health care exchanges - something from which we might benefit, and the ways that the ACA will affect the industry. The way that insurance companies respond to the Act could affect us, in terms of either the premiums we are asked to…. [read more]

Sarbanes-Oxley Research Proposal Abstract Term Paper

… Sarbanes-Oxley Research Proposal
The intent of this research proposal is to evaluate, quantify and predict
the implications of the extent to which the 2002 Sarbanes Oxley Act has had
to date and will have in the future regarding the formation of smaller,
privately held businesses and the decision of larger, publicly-held
corporations to go private in order to avoid the costs and complications of
complying with the Sarbanes-Oxley Act. The migration of smaller companies
away from being public to opting to become private are also researched and
validated in the proposed research. The Sarbanes-Oxley Act has also been
attributed with the decision of smaller firms to seek acquirers to
alleviate the costs of being in compliance. The role of acquisitions as an
exit strategy…. [read more]

Sarbanes-Oxley Legislation's Effect Term Paper

… " (O'Brien, 2002) Electronic financial accounting systems, enterprise resource planning, general ledger and supply chain management systems "will all be subject to the regulation." (Logan and Mogull, 2003) Sarbanes-Oxley also requires that companies keep good records of all financial dealings in an accountable manner, and often companies may have had adequate control over paper records, had inadequate control electronic documents. IT firms are more likely to use virtual records that can be deleted, have less administrative protocols because they are constantly changing and have yet to be standardized in such a volatile industry, and are thus uniquely in danger to fall afoul of the legislation. The innovations characteristic of the industry may fall befoul of the requirement that "installations or modifications to enterprise financial reporting…. [read more]

Impact of the Sarbanes Oxley Act on Corporate Financial Reporting Research Paper


The Sarbanes-Oxley Act (SOX) was enacted in 2002 as an investor protection act in the wake of a number of different financial scandals, each of a slightly different type. Public confidence in both financial reporting and in auditing brought about the changes, which were designed to restore public confidence in the accuracy of financial statements and by extension in the entire capital market system. There are eleven sections to SOX, so the impacts on corporate financial reporting are wide-ranging.

SOX establishes rules and regulations for financial reporting, including responsibility for financial statements, transparency in reporting and disclosures, the auditing process and other areas. The legislation is widely believed to strengthen corporate accounting controls. However, there are drawbacks to SOX, many of them related to…. [read more]

Effects of Sarbanes Oxley SOX Dissertation

… ¶ … Compliance of the Sarbanes-Oxley Act

Impacts and Compliance of the SOX

The study investigates the impact of the Sarbanes-Oxley Act 2002. The literatures are reviewed to reveal the motive behind the passage of SOX Act. The Act is to protect the investors and improve the accuracy of the accounting practice. With the costs of compliance, many smaller firms migrate to private to escape the costs burden. However, larger firms enjoy abnormal returns at post-SOX. Both primary and secondary data are used to test the hypotheses and satisfy the research objectives. The analysis of data is implemented for the validity and reliability of data.

Research findings reveal that smaller firms leave public and go private because of the costs burden. However, some sophisticated investors…. [read more]

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