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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 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 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. 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 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]

Sarbanes-Oxley Act Essay

… Still, it is often difficult to legislate moral conduct and behavior. Critics of the Sarbanes-Oxley Act cite this as a weakness (Weinberg, 2003). However, I view this in another light, particularly because there are provisions in the Act that offer checks and balances that did not exist prior. It is much harder to have conflicts of interest in corporate accounting today. Auditors used to provide higher margin consulting services to audit clients. Corporate directors often lacked understanding or independence -- or both. Today, firms must register with the PCAOB which acts as an independent, non-profit, self-regulatory organization. This helps ensure standards, quality control and greater transparency in reporting. Auditors now operate under the direct oversight of the SEC.

Sarbanes-Oxley also prohibits accounting firms from doing…. [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 SEC 404 Term Paper

… Sarbanes-Oxley Act SEC 404

The Sarbanes-Oxley Act of 2002, which is also known under the name Public Company Accounting Reform and Investor Protection Act of 2002.was implemented as a requirement for companies to thoroughly report on internal control measures over financial reporting (Weirich, 2006). It also necessitates that auditors conduct investigations in order to render opinion on that report as well as opinion in response to the internal control (Weirich, 2006). The relaxed laws of the past allowed for accounting scandals of huge proportions, due to the lack of attention towards the internal controls of companies. Public trust in accounting practices and financial reporting diminished because of these scandals, and a detailed and structured measure in the form of the Sarbanes-Oxley Act Section 404 was…. [read more]

Sarbanes-Oxley Act Term Paper

… Investors of the corporation were not told and informed of these changes in rules, and this resulted in them perceiving this as a quick jump in income. In fact, Wall Street made a comment on the working of the Xerox Corporation that it was 'working wonders', and this led to a sudden increase in the stock prices of the company. This fraud was only one of a number of frauds perpetrated by the company, and this had to soon come to an abrupt end when in the year 2002, the fraudulent accounting activities of the Xerox Corporation became a matter of public knowledge and the Securities and Exchange Commission finally charged the company with committing massive frauds and cheating the public. The company not only…. [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 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]

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]

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]

Improvements in Integrity, Financial Accountability Term Paper

… Conclusion

The pressures to perform have created a corporate environment where honest accountants are either criminalized or in which otherwise-honest accountants must actively seek out duplicitous schemes whereby the books are cooked and personal profit and gain in unjustly accrued by a few at the expense of shareholders. The research clearly showed that despite the accounting reforms contained in the Sarbanes-Oxley Act of 2002, the Securities & Exchange Commission Rules 38a-1 and 206(4)-7 of the Investment Company and Investment Advisers Acts of 1940, respectively; NASD Rule No. 3013; and the Dodd-Frank Wall Street Reform and Consumer Protection Act, some companies will continue to practice unethical and even criminal accounting in an effort to enrich themselves and others in ways these reforms are specifically intended to…. [read more]

Worldcom Prior to the Corporate Essay

… CEOs must also personally vouch for their companies' statements and give well-documented evidence that their internal control systems are in order.

The Sarbanes-Oxley Act Provides a structural foundation that incorporates workflow, document management and account publishing to establish compliance processes in order to manage businesses effectively.

The Current Status Of World

WorldCom currently is called Verizon communications, an American communication company headquartered in Ashburn, Virginia. The company was formerly a subsidiary of WorldCom using the name MCI WorldCom before finally using Verizon in April after emerging from the parent company's fraud scandal. The company offers several products and services including wired and wireless telecommunications, wireless voice over internet protocols and data services among others. With gross revenue of approximately $110 billion and employing more than…. [read more]

NYS Public Authority Accountability Act Term Paper

… NYS Public Authority Accountability Act

For far too long public authorities have operated behind closed doors without any real oversight or accountability...."

Richard L. Brodsky (D-Westchester)

Revealing Operations behind Closed Doors

The result of public authorities operating behind closed doors without: "real oversight or accountability," according to Richard L. Brodsky (D-Westchester), NYS Assemblyman Chair of the Committee on Corporations, Authorities and Commissions, "has been a systemic pattern of corruption and mismanagement." Consequently, the "systemic pattern of corruption and mismanagement," led to the passage of the NYS Public Authority Accountability Act. This paper examines the NYS Public Authority Accountability Act, the S-OX Rule 404, a related report by the NYS Comptroller, and a report by the AG and the State IG, requested by NYS Governor, which…. [read more]

Johnson and Johnson Annual Report Case Study

… The decision by the company to include the said information on its statement could have been influenced by the need to meet the expectations of other key stakeholders including but not limited to stockholders (existing and prospective), suppliers, and various statutory bodies.


In my opinion, it is clear that the change in the company's diversification is of great concern in this case.

Three parts of the world where the company's sales went up: United States, Western Hemisphere excluding U.S., Asia-Pacific, Africa

Part of the world where the company's sales went down: Europe


Amount of treasury stock Johnson and Johnson owns as of December 31, 2012: 341,354,000


Total market value = number of outstanding shares of the company's stock * company's stock market…. [read more]

Vose, D. ). Risk Analysis Annotated Bibliography

… Section 404 has been specifically discussed that outlines the internal control assessments required of the firms. Securities and Exchange Commission (SEC) also requires publicly traded companies to comply with Treadway Commission's Committee of Sponsoring Organizations (COSO). The case of Motorola IT governance model is taken to demonstrate how compliance with SOX can be ensured for data and IT security by organizations. The article observes that SEC fails to provide specific guidance on IT security; rather it leaves room for interpretation by firms. There is brief mentioning of SOX acts that outline compliance related issues such as Sections 302, 404, 409, and 802 of SOX 2002. The article concludes with an observation that firms with least effective IT security made decisions related to IT governance at…. [read more]

SOX 404 Term Paper

… Sarbanes-Oxley Act came at the wake of a lot of scandals and apprehension and there was a lot of media pressure in its enactment that was caused by the collapse of Enron. This act provides stiff punishments for those at the helm of companies and fines of over $5 million for violation of the laws. (Snedaker, 2006) the act is named after senator Sarbanes and Oxley who are the architects of the act. Sarbanes-Oxley Act was meant to introduce regulation to corporate governance and financial accounting. The act brought in mandatory rules regarding the internal financial controls. (Romano, 2005) the Sarbanes-Oxley act of 2002 was assented to by the President on 30th July 2002 and principally applies to the issues as stated in the securities…. [read more]

Most Important Pieces of U.S. Banking Financial Sector Legislation Essay

… ¶ … U.S. Banking/Financial Sector Legislation in the Last 50 Years

The past half century has been a turbulent period in America's banking and financial sector history based on a need for news laws in an increasingly globalized marketplace. Although a number of important pieces of legislation were enacted during the period from 1960 to 2010, an argument can be made that the three most important were the Sarbanes-Oxley Act of 2002, the Gramm-Leach-Bliley Financial Services Modernization Act of 1999 and the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. In support of this argument, this paper provides a review of the relevant literature concerning these three acts, followed by a summary of the research and important findings in the conclusion.

Review and Discussion…. [read more]

Accounting for Income Taxes Term Paper

… Accounting for Income Taxes

The role of the tax professional has changed substantially in the past decade. Previously, the focus was on tax planning and the marketing of tax products. The focus today is more on the corporation's tax provision and compliance work. This shift has occurred as the result of changes in the regulatory environment. In particular, the enactment of Sarbanes-Oxley (SOX) has shifted emphasis towards the compliance side of the business. This paper will analyze the changes in the tax accounting profession over the past decade with particular attention to the increase in emphasis on compliance. Not only did SOX change the operating environment for tax professionals, but another concern arose concerning the use of abusive tax shelters. In the mid-1990s the use…. [read more]

Boards of Directors Are Driven by Far-Reaching Term Paper

… ¶ … boards of directors are driven by far-reaching regulatory reforms and increased corporate expectations in order to comply with the Sarbanes-Oxley legislation. Consequently, many feel an ever-growing need for orientation, education, and evaluation. Corporate directors are currently trying to gain the hands-on knowledge required to become more valuable professionals in the boardroom, with the help of general counsels, financial executives, HR representatives or corporate secretaries. Ethics is a very important part of their change, since enforcing business morality is the main objective behind the Sarbanes-Oxley act.

Sarbanes-Oxley is a U.S. law passed in 2002 designed to strengthen corporate governance and restore long lost confidence to the investors. The Act was supported mainly by Senator Paul Sarbanes and Congressman Michael Oxley. It was the natural…. [read more]

Regulatory Compliance Costs What Impact Research Proposal

… Regulatory Compliance Costs

What impact does regulatory financial reporting mandates have on a firm's spending on other areas of business operations?

The Sarbanes-Oxley Act of 2002 (SOX) established new standards for accounting practices in order to increase transparency and to restore public confidence in American businesses. The act strengthened corporate accounting controls, but it also adds another level of complexity to an already burdened accounting system. The purpose of this research is to examine academic research related to the affects of these reporting mandated on a firm's expenditures in other areas of the operation.

A review of the relevant literature on this topic reveals many opinions on the impact of Sarbanes-Oxley and the cost of accounting. It was found that the impact was greater for…. [read more]

SOX Case This Set of Facts Essay

… SOX Case

This set of facts definitely presents significant problems for both XYZ and Big 4 when it comes to violations of the Sarbanes-Oxley Act of 2002. Though sections 302 and 402 of the legislation are often focused on by companies and individuals in terms of compliance (with the latter being especially bemoaned by many), this case actually involves more diverse and less-familiar parts of the legislation dealing with auditor independence, conflicts of interest, and corporate responsibility while at the same time touching (to a lesser degree) on issues of disclosure to investors and even potential fraud or other criminal behavior (H.R.3763.ENR 2002; Kuschnik 2008). Titles Two, Three, and Eight all have some bearing on the facts at hand, and specific provisions make it clear…. [read more]

Entrepreneur Description of the Business Research Paper

… It will be important to be in communication with officials in case the regulatory environment changes. As a result, the company should be able to perform well in inspections and avoid legal actions that could destroy the company.

There is also the tax code to consider. With flow-through profits, the taxation will be handled on the principle's person return. However, to ensure full compliance with accounting regulations, the company will pay a retainer to an accounting profession who can ensure that the statements and tax documents are prepared in full compliance with the law. The principle will also be familiar with the applicable regulations to ensure that there is a minimal amount of problems.

The Sarbanes-Oxley Act applies to publicly-traded companies (Sarbanes-Oxley Act, Sec. 408).…. [read more]

Business Ethics Research Proposal

… Business Ethics

What do you consider the three most important ethical issues or dilemmas encountered by modern day businesses? Explain and give examples of each. How do laws, societal changes in values and globalization present challenges for corporate business ethics?

Transparency: The financial industry has come under increasing criticism for concealing the level of risk it took with investor's earnings to make a profit. This raises the ethical question as to how much of a right investors have to know about a companies' range of investments, given the damage large-scale losses can do to retirement funds and the American economy in general. Seeing generations of retirees without nest eggs is not only dangerous for the individual, but also for society. Additionally, American taxpayers find themselves…. [read more]

Corporate Governance: A Review Essay

… , 2003). Increased need of capital resources to be raised from open markets has also led the importance of corporate governance to increase in recent years. Another aspect of corporate governance culture that has increasingly come to be scrutinized is the value-based governance and bottom line governance. Firms in Europe and specifically in the U.S. market have emphasized that their companies should reengage in value-based corporate governance (Du Plessis, et al., 2010; p. 11)In modern corporations, corporate governance arises through the severance of ownership and management control in the organizations.

Principles of Corporate Governance

Researchers have also identified the essential principles on which the conduct of corporate governance rests. These are:







Social responsibility (Du Plessis, et al., 2010).

Du…. [read more]

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