Pros And Cons Of Sox

The Sarbanes-Oxley Act of 2002 also called SOX or Sarbox is a law that aims to deter and prevent future accounting fraud, increase confidence in public company financial reporting and to protect stockholders. Although the regulations of this Act are not perfect and are the cause of many controversies whether this Act had a positive impact in American business or not, it led to changes in the corporate culture in the United States and abroad. Also known as the 'Public Company Accounting Reform and Investor Protection Act' (in the Senate) and 'Corporate and Auditing Accountability and Responsibility Act' (in the House) and more commonly called Sarbanes–Oxley, Sarbox or SOX became a law on July 30, 2002 as a reaction to Enron and WorldCom-type accounting scandals. The most important part of this Act is that it provides a new nonprofit company responsible for the inspection and sanction of audit firms; this is "the Public Company Accounting Oversight Board”. SOX led to a greater internal control of financial information, and an increase of independence among the boards, committees, and directors. Also, new requirements were imposed such as reports and audits. “The old ways weren’t working. That idea lit the corporate responsibility movement, igniting a more robust respect for …show more content…
It allows for director liability if the board fails to exercise the appropriate oversight” (Maleske, 2012). Also, this Act encouraged the adoption of corporate codes of ethics, and if companies did not have one they had to explain why, but even Enron had one, therefore it is clear that the mere existence of a corporate code of conduct is useless without