Sox Article Analysis

Sarbanes-Oxley Act Article Analysis

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The Sarbanes-Oxley Act (SOX) was passed by Congress in 2002 as a means of protecting investors, reforming public company accounting standards, and bringing ethical responsibility into focus. At the heels of scandalous company financial troubles, SOX brought federal reform to boost investor confidence, prevent accounting fraud, and improve companies financial disclosures. The reform has brought many changes to the accounting profession, including internal controls, auditing, and the use of technology.

The effects of SOX on publicly traded companies is immeasurable but can be clearly viewed through a glance at smaller companies that consistently thrive. There have been suggestions that SOX would have the greatest impact on smaller companies. Shutterfly, Inc. is a small publicly traded company that began its online journey in 1999; it continues to grow and expand its operations successfully. The company offers its clients personalized publishing capabilities for digital photos, including photo books, photo sharing, baby announcements, wedding invitations, greeting cards, and more (Shutterfly, Inc., 2013).

The Sarbanes-Oxley Act lacks particular guidance for companies, in general because there are not specific standards a company must meet. Rather, it forces companies to consider its weaknesses or risk factors for financial reporting and use reasonable controls to negate those factors (U.S. Securities and Exchange Commission, 2008). Shutterfly developed an internal committee made up of a few members of the Board as well as other chosen members by the Board, to oversee the compliance of SOX and rules set forth by the NASDAQ Stock Market (Shutterfly, Inc., 2013). The committee is responsible for reviewing, discussing, and establishing solutions for matters regarding financial statements and disclosures; internal controls; independent auditors; and legal or regulatory...