Article Review

Article Review

Jacqueline Carr

Law/421

February 18, 2013

William C. Anderson

Article Review

In a congressional response during a period of market turmoil and the Great Depression, the congressional hearings into corporate fraud in the 1930’s, Congress passed the Securities Act of 1933. This act was viewed by many as being inadequate, which one year later forced Congress to pass the Security Exchange Act of 1934.

When the Enron/Anderson scandal came to light in late 2001, followed by Imclone and similar stories, congress did very little. There were other committees which held hearings, several bills were introduced which addressed the corporate misconduct. At the time these corporate misconducts took place, the government was divided on how to address the problems. At that time the corporate reform had stalled. In the Summer of 2002 the second wave of scandals took place, Worldcom and Adelphia, the stock market plummeted for a few months before the elections that fall at which time the Congress needed to take action. In August of 2002, Congress rushed to pass the Sarbanes and Oxley Act; suddenly the controversial proposal had come very popular. The bill was signed by President Bush on July 30, 2003 after having some skepticism on some of the provisions (Pepperdine University, 2013).

The Sarbanes and Oxley Act set the board outlines for reform, after the Securities Exchange Commission picking of the board of directors did not go as well as planned. In the following is a very broad overview of some of the requirements, laws and rules which is a part of the reform: Restrictions on Auditors, an auditor is prohibited from “contemporaneously” providing a public company auditing client with the following specific types of consulting or other non-audit services: Bookkeeping or other services related to the accounting records or financial statements of the audit client, financial information systems design and implementation, appraisal or valuation services,...