Sarbanes Oxley Act of 2002 A Response to High-profile...

Surbanes Oxley Act 2002 Historical forces have a way of acting in concert, even when propelled by markedly different factors. In the United States, a spate of astonishing high-profile corporate failures have shaken investor confidence and placed corporate fraud and accounting abuses center stage before the public and its governmental representatives. The legislative response to these events was the rapid passage of the Sarbanes- Oxley Act (the Act) of 2002, which virtually overnight transformed the landscape of financial reporting and corporate responsibility. Within the same relative time frame, the European Union (EU) has been pushing to eliminate barriers to cross-border trading in an effort to support the creation of a†¦show more content†¦Under the Act, companies must routinely report on compliance and identify, on an ongoing basis, any problems or aberrations found with their compliance procedures. There are four specific Sarbanes- Oxley sections that relate to enterprise applications and their associated processes: PURPOSE In 2001, the United States monumentally adopted a sweeping body of reform legislation – the U.S. Public Company Accounting Reform and Investor Protection Act of 2002, known as the Sarbanes-Oxley Act of 2002. Sarbanes- Oxley initiated a host of compliance and procedural requirements. This act was primarily in response to a series of U.S. corporate failures that resulted in an enormous loss of public investment funds. Hence, the U.S. government - Securities Exchange Commission (SEC) in an effort reduce fraud and conflicts of interest, sought to legislatively demand corporate responsibility and accountability from corporate executives to all stakeholders in order to increase financial transparency and re-establish investor confidence. The legislation is intended to address some of the questionable accounting practices that underpinned the recent spate of corporate scandals thereby reducing fraud and failures in corporate reporting. The act’s legislative requirements directly affect auditor firms, boards of directors, corporate executives, and Wall Street analysts – their make up, relationships andShow MoreRelatedThe Sarbanes Oxley Act Of 20021015 Words   |  5 PagesThe Sarbanes-Oxley Act of 2002, also known as the SOX Act, is enacted on July 30, 2002 by Congress as a result of some major accounting frauds such as Enron and WorldCom. The main objective of this act is to recover the investors’ trust in the stock market, and to prevent and detect corporate accounting fraud. I will discuss the background of Sarbanes-Oxley Act, and why it became necessary in the first section of this paper. 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