Sarbanes-Oxley and the Pcaob Essay

771 Words Jun 16th, 2012 4 Pages
The Sarbanes-Oxley Act of 2002 (SOX) was a direct output of the financial statement fraud that sank industry giants such as Enron and Worldcom.

1. What are the primary goals and tenets of SOX with respect to fraud?

The goals of the Sarbanes-Oxley Act are expansive, including the improvement of the quality of audits in an attempt to eliminate fraud in order to protect the public’s interest, as well as for the protection of the investors (Donaldson, 2003). Prior to the implementation of SOX auditors were self-regulated with consumers reliant on their honesty and integrity. However, the auditing profession failed at self-regulation, thus necessitating the implementation of a security measure that would protect the investors and the
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The PCAOB has been given the authority to register, set standards for, inspect, and investigate public company auditors. Additionally, it has been given the authority to discipline public company auditors for the violation of federal securities laws or other professional standards that govern the preparation and issuance of audit reports. (Coates, 2007; Hardison & Pashkoff, 2012)

Since its inception there have been forty-five publicly disclosed enforcement actions, eleven of those enforcement actions being against one of the “Big Four” accounting firms. The numbers of those publicly announced belie their activity in that they are apparently more active than the numbers of those publicly disclosed actions indicate, having twenty-three formal investigations open as of the close of 2010. The appearance of non-activity is largely due to the classified nature of the investigations. However, the fact that committee still in existence with a continual increase in case load should be indicative of at least some success in attaining their goals. (Hardison & Pashkoff, 2012)

4. Based upon what the goals of SOX were, how is it implemented and enforced, through your own experience and research (both if applicable), has SOX been a

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