The Sarbanes Oxley Act of 2002 which was also called SOX was published by the Congress in 2002 to protect investors’ interest (SOX, 2002). After the enactment of SOX, corporate financial reporting was more strict and normative. However, there were a lot of accounting scandals before 2002. And the Enron scandal attracted the most public attention of all the scandals.
Enron was created in 1985 and was one of the largest energy companies around the world. However, in 2001 and 2002 the company was disclosed that it had a large debt which was not recovered. Enron’s stock prices fell to less than $1 per share and it decided to file for bankruptcy protection. And one year later, Enron was dissolved (Thomas, 2002). The reason for Enron’s devastation was that its internal control was very loose. In addition, Arthur Andersen was also dissolved because Arthur Andersen was Enron's auditor and did not disclose Enron's much false accounting information. Since then, the legislation of SOX was established to strengthen corporate responsibility and deter false information such as overstating revenues and understating expenses. …show more content…
There are three sections which are SHORT TITLE; TABLE OF CONTENTS, DEFINITIONS and COMMISSION RULES AND ENFORCEMENT and eleven titles such as Public Company Accounting Oversight Board, auditor independence, corporate responsibility, enhanced financial disclosures analyst conflicts of interest and so on in this Act (SOX, 2002). All of these contents are related to internal control, supervision system and corporate financial reporting. I will talk about some of these in my
Enron was created in 1985 and was one of the largest energy companies around the world. However, in 2001 and 2002 the company was disclosed that it had a large debt which was not recovered. Enron’s stock prices fell to less than $1 per share and it decided to file for bankruptcy protection. And one year later, Enron was dissolved (Thomas, 2002). The reason for Enron’s devastation was that its internal control was very loose. In addition, Arthur Andersen was also dissolved because Arthur Andersen was Enron's auditor and did not disclose Enron's much false accounting information. Since then, the legislation of SOX was established to strengthen corporate responsibility and deter false information such as overstating revenues and understating expenses. …show more content…
There are three sections which are SHORT TITLE; TABLE OF CONTENTS, DEFINITIONS and COMMISSION RULES AND ENFORCEMENT and eleven titles such as Public Company Accounting Oversight Board, auditor independence, corporate responsibility, enhanced financial disclosures analyst conflicts of interest and so on in this Act (SOX, 2002). All of these contents are related to internal control, supervision system and corporate financial reporting. I will talk about some of these in my