Sarbanes Oxley Act Of 2002 Essay

In the early 2000’s the United States was rocked by several companies, such as: Enron, WorldCom, Tyco and Sunbeam because these companies collaborated with their auditors and provided misleading financial reports to their investors and shareholders. Consequently, the Sarbanes Oxley Act of 2002 was enacted by the U.S. Congress to protect investors from the possibility of fraudulent accounting activities by corporations by mandating strict reforms to improve financial disclosures from corporations and preventing accounting fraud (Staff, 2017). It is vital to compare and contrast the views of management and accounting regarding changes required by the Sarbanes Oxley Act on Internal Controls and how these changes have affected corporations, accounting firms and investors. Primarily, the focus will be on comparing the views of management and accountants regarding changes under SOX. …show more content…
First, Section 302 is a mandate that requires senior management to certify the accuracy of the reported financial statement (Staff,2017). Secondly, Section 404 is a requirement that management and auditors establish internal controls and reporting methods on the adequacy of those controls (Staff,2017). Furthermore, issuers are required to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting, to include the assessment of the effectiveness of such controls and procedures (Soxlaw.com, 2017). Thirdly, Section 802 imposes strict penalties for violation of the SOX regulations that can lead to step fines as well as jail