Article Review

Article Review

LAW/421

December 16, 2013

Article Review

DATE: December 16, 2013

TO:

FROM:

RE: How does the Sarbanes-Oxley Act impact American business?

Bumgardner, L. (2013). How does the sarbanes-oxley act impact american business. Retrieved from http://gbr.pepperdine.edu/2010/08/reforming-corporate-america/

ARTICLE SYNOPIS

Throughout the article, Sarbanes-Oxley (SOX) and its provisions are discussed in detail. On July 30, 2012, former President Bush signed the SOX Act of 2002 into law. Under SOX, auditors, CEO’s and CFO’s are now required to certify the accuracy of financial statements. Scandals such as, WorldCom, Enron, Andersen, and Adelphia are all reasons that SOX was signed into law. The implementation of SOX was not one that went over well, but as a result, the Public Company Accounting Board was established from one of its provisions. The Public Company Accounting Board was formed to avert auditing abuse. The Securities and Exchange Commission (SEC) was responsible for naming five new members of the board.

LEGAL ISSUE

In 2001, congress did very little when the Enron/Anderson scandal first unraveled. The committee held several hearings, which introduced numerous bills to address corporate misconduct. Differences on how to handle the problems were so elevated between the Senate, the House of Representatives, and the White house differences that no legislation appeared to be imminent. To the public it appeared that all efforts to fix corporate reform had stalled completely. It was not until 2002 when the second wave of scandals, the continuing plummets of stock markets, and the fall elections around the corner, that Congress, the Senate, and the White House saw a need to take action.

MANAGERIAL PERSPECTIVE

The Public Company Accounting Oversight board was instructed by SOX to set standards for auditing that would be used by accounting firms, which performed audits on public companies. The importance of the board is to help...