Accounting Essay

6149 Words May 21st, 2011 25 Pages
Sarbanes Oxley Companies
Abstract
Sarbanes oxley act 2002 was passed on July 30, 2002 and only the public companies are now feeling its impact. This act frequently called the “most significant accounting or auditing legislation since the securities exchange Act of 1934”. After the implementation it has established its demands to the companies for proper management and disclosure of risk. Nortel networks is a giant corporate in telecom industry and as it is expected they also have faced the challenges come from the SOX act.
Some of them are in favor and some are against the Nortel. ‘SOX’ has manipulated a larger impact on Nortel internal employee and external customers as well as their financial statement. The outcome of the Nortel is
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So, it can be said that the act had not to face approving challenges.
The Sarbanes oxley act gives the government a strong control. This act is commonly known as Sox or Sarbox act and it consist of eleven titles. Each title contains different sections and setting from further corporate board tasks to criminal penalties. The Sarbanes oxley act was named after senator Paul Sarbanes and Representative Michael G. Oxley. President George W. Bush signed it into law, stating it included, “the most far reaching reforms of American business practice since the time of Franklin D. Roosevelt”. The established legislation is applicable for all U.S. public company boards, management and public accounting firms. This new legislation is an enhancement to standardize the process for all US public companies; the companies will become more transparent on company board, Management and public accounting firms.
For example, the Tyco International case reduced the confidence and shocked the investors in the listed companies in the share market and the liable reporting authorities. So, the purpose of the act was to recover the confidence and make tight the government rules and regulations on the companies to keep them under control. The consistent financial reporting process is ensured by this act. Consequently, the reliability to the public in accordance with disclosure is increased. The telecom professionals found themselves under the force to

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