Business

Sarbanes-Oxley Act of 2002

Mary Nellums

561

July 8, 2013

University of Phoenix

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 was put in effect because of past scandals by large

companies, which create need to regain public trust. Its name came from Senator Paul Sarbanes

and Representative Michael Oxley. The Act protects the interest of workers and shareholders.

The Sarbanes Act is known as the most significant change to securities laws since 1934. The Act

is mandatory for businesses to pay for the internal and external audits of their financial

statements. It forces business to comply with law. Investors wanted the ability to take look into

what is happening in companies they were investing. The idea of accessing otherwise hidden

records helped restore confident to stakeholder. Fraud detection and prevention were the main

benefits of the Sarbanes-Oxley Act, and success has proven that it is more difficult to hide

fraudulent activities within companies ("Sarbanes-Oxley Act", 2006)..

Requirements and Consequences

The Act includes the institution of the Public Company Title I of the Sarbanes Oxley Act

says that a new Public Company Accounting Oversight Board will be appointed and overseen by

the SEC. The Board consists of full-time members, Account Oversight Board, which is

responsible for auditing the auditors and to make sure certification of financial reports is in order.

The Act contains reforms for issuers of publicly traded securities, corporate board members,

auditors, and lawyers. The purpose is to improve the quality of financial reporting and

accountability ("Sarbanes-Oxley Act", 2006). The Sarbanes Oxley Act affects any CPA or...