Sarbanes Oxley Act ( Sox ) Essay

705 Words 3 Pages
In response to these scandals, Congress drafted and passed the Sarbanes-Oxley Act (SOX) of 2002. Sarbanes-Oxley Act contains 11 titles, they provide specific guidelines and regulations for financial reporting. The titles are: Public Company Accounting Oversight Board (PCAOB), Auditor Independence, Corporate Responsibility, Enhanced Financial Disclosures, Analyst Conflict of Interest, Commission Resources and Authority, Studies and Reports, Corporate and Criminal Fraud Accountability, White Collar Crime Penalty Enhancement, Corporate Tax Returns and Corporate Fraud Accountability. In the introduction of the act, it states that it is an act “to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes”(Sarbanes-Oxley Act, 2002).
Title I of the SOX comprises the creation of the Public Accounting Oversight Board (PCAOB) (Sarbanes-Oxley Act, 2002). The PCAOB is a private-sector, nonprofit corporation which oversees the auditors of public companies. It is to protect the interests of the investors and to further the public interest when preparing informative, fair, and independent audit reports. The title consists of 9 subsections. Section 101 describes the establishment of PCAOB, which consists of 5 full time members, 2 of which are CPAs, all appointed by the SEC (Philipp, CPA, & CGMA, 2014). Section 102 states that public accounting firms are to register with the Board in order to issue or…

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