Essay on The Sarbanes Oxley Act Of 2002

1690 Words null Page
On July 30, 2002, Congress passed with a near unanimous vote what is considered by many to be “the most comprehensive financial reporting legislation since the Securities Acts of 1933 and 1934” (Louwers at al., 2015). The Sarbanes-Oxley Act of 2002, commonly referred to as “SOX”, was named after its two main creators U.S. Senator Paul Sarbanes and U.S. Representative Michael G. Oxley. The Sarbanes-Oxley Act has a goal “To protect investors by improving the accuracy and reliability of corporate disclosures…” and was passed with the intent of ending self-regulation and increasing independence of public accounting firms, increasing internal controls, and management accountability and enhancing transparency in financial reporting and information. Violations of the new law also lead to stricter criminal penalties.
The Sarbanes-Oxley Act of 2002 led to major in the auditing profession. For starters, Title I of SOX established the Public Company Accounting Oversight Board (PCAOB). Sarbanes-Oxley gives the PCAOB the authority to set auditing standards and regulate accounting firms. As opposed to the self-regulation and peer review system of accounting firms that had been employed for sixty years prior, SOX shifted the oversight of audit firms from the AICPA, a private organization, to the quasi-governmental PCAOB. The SEC oversees the PCAOB, but the people on the board and the staff are not government employees.
According to the PCAOB website, the mission of the PCAOB is to…

Related Documents