Submitted by: Submitted by dixie
Views: 466
Words: 2190
Pages: 9
Category: Business and Industry
Date Submitted: 10/10/2012 09:06 PM
The Sarbanes-Oxley Act (SOX) of 2002 was passed by Congress. As a result of outrageous amount of fraudulent activities by these large public companies like Enron and WorldCom, as well as the Red Cross and United Way, which are large nonprofits, who has been covered up by accountants and auditors. Arthur Anderson, one of the large accounting firm was part of the fraud activities, embezzlement and cover ups, made millions of dollars as they provide consulting and other services to these firms that they audited. The Sarbanes-Oxley Act (SOX) of 2002 made this illegal. Also it requires corporate CEOs and CFOs to follow a new and more complete framework of internal controls, and to present completed financial reports. There are severe penalties for making deliberate misstatements in these reports, up to $500,000 in fines and five years in prison for each instance, but for those who , adjust, obliterate or conceal financial records can go to prison up to twenty years . In addition, SOX set up the Public Company Accounting Oversight Board (PCAOB) to watch over all public accounting firms and put standards in place for auditing and quality control. Under sized corporations, particularly those capitalized at $75 million or less; repeatedly protest about the costs of compliance with Sarbanes-Oxley. They particularly detested section 404 which required all public companies to have a framework of internal controls to identify fraud and evaluate risks that would be inspected and attested to by independent external firms. Opponent of the law such as the Business Roundtable and Chamber of Commerce complained that it was an exclusive and burdensome regulation that was making companies more risk-averse, and causing many smaller firms to go private, delist from the New York Stock Exchange or refuse to engage in new Initial Public Offerings (IPOs). Under-sized public companies were allowed to setback completion of parts of section 404 until 2007 and excuse totally from...