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Sarbanes Oxley Effectivness
Sarbanes Oxley Effectiveness
In the United States public corporations are always trying to earn more and entice more investors. Sometimes this makes public companies act unlawfully and commit fraud to keep the company going and investors happy. Lawmakers are trying to prevent this fraud and protect the investors. This helps keep investor confidence up and help maintain a good economy.
In 2002 President Bush signed the Sarbanes Oxley Act to protect the investors. “The Sarbanes Oxley Act mandated strict reforms to improve financial discloser from corporations and prevent accounting fraud (Investopedia.com)”. This act also established the Public Company Accounting Oversight Board (PCAOB). “The PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors and the public interest by promoting informative, accurate, and independent audit reports.”(PCAOBUS. Org). Many find that this act has helped the prevention of fraudulent activities of businesses. “A PricewaterhouseCoopers Management Barometer survey of 136 CFOs and managing directors in June found 91% had made changes in controls and compliance practices as a result of the law, compared with 85% of the same group surveyed in October 2002.”(Hoffman, 2003). This study has shown that within the year that Sorbanes Oxley has been in acted that companies have made improvements and complied with the law. “The law strengthened internal controls over companies' accounts and set stiff criminal penalties for executives who cook the books. One of its toughest provisions required corporate executives to certify the accuracy of financial statements and imposed jail terms of up to 20 years for willful violations.” (Drawburg and Aubin, 2012). The jail time helps to deter corporations from violating the law. Others say that the act won’t prevent fraud or loopholes that allow fraud to happen. A good way to improve the law...