The Sarbanes Oxley ( Sox ) Essay - 2099 Words

In 2002, the U.S. Congress passed an act called the Sarbanes-Oxley (SOX) Act in order to protect people from possibly engaging in fraudulent accounting activities committed by public corporations. It is a reform that requires corporations to produce better financial documents in order to stop any future accounting fraud and contains provisions for companies to follow to prevent any corrupt behavior. SOX was created in response to major accounting scandals committed by corporations such as Enron. Enron Corporation was an American energy trading company who committed the largest audit fraud alongside Arthur Andersen and filed for one of the largest bankruptcies in history in 2001 after producing false numbers and committing fraud for years (â€Å"Enron’s Questionable Transactions† page 93). Enron failed to run an ethical business in multiple aspects. The executives of the company abused their powers by having board members not properly oversee its employees. Enron committed accounting malpractice by producing false financial reports to hide the debt from failed projects and deals. Using a mark-to-market accounting method, Enron would create assets and claim the projected profit for the books immediately even if the company had not made any profit yet. In order to hide its failures, rather than reporting their loss, they would transfer the loss to an off-the-books account, ultimately leading the loss to go unreported. Along with Enron hiding losses and creating f alse profit for theShow MoreRelatedThe Sarbanes Oxley Act ( Sox )1728 Words   |  7 Pagesaccounting scandals that led to the passing of Sarbanes-Oxley Act, which introduced the most comprehensive set of new business regulations since the 1930’s. The Sarbanes-Oxley Act (SOX) is an act that was passed by United States Congress in 2002. This act safeguarded investors from the likelihood of fraudulent accounting practices of publicly traded organizations by authorizing strict reforms to advance financial disclosures and prevent accounting frauds. With SOX being an extremely important piece ofRead MoreThe Sarbanes Oxley Act ( Sox )1604 Words   |  7 PagesThus, to respond to the public pressure over acts of corporate offense, the Sarbanes-Oxley Act (SOX) was enacted in 2002. SOX proposed major changes to the regulation of corporate governance and financial reporting by improving the accuracy and reliability of company disclosure. This essay will explain the effects of SOX on the financial statement fraud in an organization. Situation Prior to the legislation of Sarbanes-Oxley Act, the regulations of financial statement were much more lax than currentRead MoreThe Sarbanes Oxley Act ( Sox )943 Words   |  4 PagesThe Sarbanes-Oxley Act (SOX) was passed by Congress in 2002, and is administered by the SEC. The SEC checks for compliance and creates rules and requirements. The Act was created to restore investor confidence in financial statements after major accounting frauds, such as Enron, Tyco, and WorldCom. In addition, SOX aimed to prevent future accounting fraud through improving the accuracy of disclosures and through increasing corporate governance, accountability, and reliability. Major Provisions TheRead MoreThe Sarbanes Oxley ( Sox ) Act1995 Words   |  8 PagesThe Sarbanes-Oxley (SOX) Act was passed by Congress in 2002 to address issues in auditing, corporate governance and capital markets that Congress believed existed. These deficiencies let to several cases of accounting irregularities and securities fraud. According to the Student Guide to the Sarbanes-Oxley Act many changes were made to securities law. A new federal agency was created, the entire accounting industry was restructured, Wall Street practices were reformed, corporate governance proceduresRead MoreThe Sarbanes Oxley Act ( Sox )1202 Words   |  5 PagesBrief historical summary on SOX enactment The Sarbanes Oxley Act (SOX) was sanctioned in July 2002 with the objective of reestablishing public trust in the markets. SOX was promised as one of the opportunities for cultivating organizational ethics by clearly outlining the code of ethics. This included the raise of truthful and strong ethical behavior. SOX moreover, demands that corporate organizations to release codes applicable to the senior financial officer. Indorsing whistle blowing in theRead MoreThe Sarbanes Oxley Act ( Sox )2238 Words   |  9 Pages The Sarbanes-Oxley Act. An act passed by U.S. Congress in 2002 to protect investors and the general public from the possibility of accounting errors and fraudulent practices by corporations. The Sarbanes-Oxley Act (SOX), named after U.S. Senator Paul Sarbanes and U.S. Representative Michael G. Oxley, which contains eleven sections, mandated strict reforms to improve financial disclosures and prevent accounting fraud. The eleven sections of the bill cover responsibilities of a public corporation’sRead MoreThe Sarbanes Oxley Act ( Sox )955 Words   |  4 PagesErnestas Zarskis BUS 5644 International Accounting and Reporting Paper #2 Dr. LuAnn Bean 1. Based on the video Bigger Than Enron, discuss at least five features of the Sarbanes-Oxley Act (SOX) that are the result of events related to corporate fraud. Under Section 302 signing officer should be familiar with the report and are responsible for internal controls and have evaluated these internal controls within the previous ninety days and have reported on their findings. Also, report should notRead MoreThe Sarbanes Oxley Act ( Sox ) Essay1609 Words   |  7 Pagesmalpractices across several companies in the United States such as Enrol Corporation, Tyco International and WorldCom, there has been a lot of attention with regards to the accounting practices in the corporate sector. Specifically, the Sarbanes – Oxley Act (SOX) which was passed by congress in 2002, was aimed at addressing the situation by regulating fraudulent accounting practices such as bribery and wrong entries in books (Williams Elson, 2010). While regulation has its own limits, it is hopedRead MoreThe Sarbanes Oxley Act ( Sox )969 Words   |  4 Pagesthe accounting field Due to my position as your Financial Adviser, it is my duty to explain to you some important changes in the accounting field and the legislation that brought about this change. In 2002 the U.S. Congress passed the Sarbanes-Oxley Act of 2002 (SOX), a legislation put in place not only to improve the accuracy of corporate disclosures, but also to protect shareholders and the general public from accounting errors and fraudulent practices in all organizations. Although these organizationsRead MoreThe Sarbanes Oxley Act ( Sox ) Essay1233 Words   |  5 Pagescompanies such as Enron and WorldCom in the turn of the century motivated Congress to pass the Sarbanes-Oxley Act (SOX) in 2002 to strengthen regulations within the accounting profession (Whittington Pany, 2014). As a result, the SOX introduced provisions that changed the accounting function, such as the establishment of the Public Company Accounting Oversight Board (PCAOB) and other major elements; however, the SOX regulations subsequently resulted in consequences to its compliance. In the United States