Proposed Lan Plan for Taylor and Sons Financial Consulting

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 was enacted as a reaction to a number of major corporate accounting scandals including those of Enron, Adelphia, and WorldCom. These scandals bilked investors of billions of dollars when the share prices of affected companies collapsed, shaking public confidence in the securities markets. The act does not apply to privately held companies, but is mandatory to all organizations large and small. The legislation came into force in 2002 and introduced changes in the regulation of financial practice and governing of corporate bodies. The legislation is named after Senator Paul Sarbanes, and Representative Michael Oxley who designed it. It has eleven segments and the most important of those are 302, 401, 404, 409, 802 and 506. A public company accounting board was established by the act and was introduced amid public curiosity.

Section 302 states that periodic statutory financial reports are to be certified, signed stating officers have reviewed the report. Secondly, the report does not contain any untrue statements, or is not missing materials in it. Third, the signing officers are responsible for internal controls, and have evaluated said controls within 90 days prior to the report and have reported their findings. Fourth, the financial statements and all related information presents the financial condition of the company. Fifth, a list of any deficiencies in the internal controls, and information on any fraud that involves employees who are involved in internal activities. Sixth, any significant changes in internal controls or related factors could have a negative impact on the internal controls. Organizations may not attempt to avoid these requirements by reincorporating or transferring their businesses outside of the United States.

Section 401 states financial statements are to be published by issuers and are required to be accurate, and must include all balance transactions. Section 404...