Sarbanes Oxley Laws And Corporate Governance Essay

778 Words Jun 13th, 2016 4 Pages
After several scandals that involved such major corporations as WorldCom, Enron and Arthur Anderson. President Bush signed the Sarbanes-Oxley Act of 2002 on July 30, 2002 which created after Senator Paul Sarbanes and Representative Michael Oxley. The act was created to regulate financial practices and corporate governance. It consists of 11 different sections or titles. It is aimed at protecting investors by providing accuracy and reliability of corporate disclosures and to help restore confidence within the investors. Sarbanes-Oxley developed the Public Company Accounting Oversight Board, a private, nonprofit corporation, to ensure that financial statements are audited according to independent standards.(Fass 2003)
In order to protect a company or a business it relies that each quarterly report financial issues has to be authorized and confirmed by the executive officer or chief financial officer. Therefore, companies are required to have an internal auditor that is certified by an external auditor. The Sarbanes-Oxley Act or SOX affects not only the financial corporations, but also IT departments that are in charge of storing electronic records for companies. The act states that the records should not be stored under five years; it essentially defines how long records can be stored and specifies what records can be stored. By not complying or adhering can lead to such consequences as imprisonment, fines or both.
The principles of internal control may vary from company to…

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