As of July 30, 2002 the Sarbanes-Oxley (SOX) Act was passed. The Act has affected both the principles and assumptions of accounting and financial reporting. As your new financial advisor I will explain the important changes made by the SOX act and who is impacted by it.
Section One
The Sarbanes-Oxley (SOX) Act was the reaction to major corporate and accounting scandals, including Enron and WorldCom. The goal of the act is to thwart and dissuade future accounting fraud, safeguard shareholders and increase confidence in financial reporting in public companies and in the United States capital markets. The SOX Act “applies to all issuers - including foreign private issuers - that: have registered securities under the 1934 Act; are required to file reports under Section 15(d) of the 1934 Act; or have filed a registration statement under the 1933 Act that has not yet become effective” (Cohen & Qaimmaqami, 2005).
Section Two …show more content…
The purpose of the board is to supply independent oversight of public accounting firms providing audit services. Furthermore the board registers auditors, terms the specific processes and procedures for compliance audits, inspects and polices conduct and quality control, and enforces compliance with the exact dictates of the Sarbanes-Oxley act. Title II institutes auditor independence in order to limit conflicts of interest. It also delivers new auditor approval obligations, reporting requirements, and restricts auditing companies from supplying non-audit services for the same clients. In Title III corporate responsibility is established; this means senior executives take individual responsibility for the accuracy and completeness of corporate financial
Section One
The Sarbanes-Oxley (SOX) Act was the reaction to major corporate and accounting scandals, including Enron and WorldCom. The goal of the act is to thwart and dissuade future accounting fraud, safeguard shareholders and increase confidence in financial reporting in public companies and in the United States capital markets. The SOX Act “applies to all issuers - including foreign private issuers - that: have registered securities under the 1934 Act; are required to file reports under Section 15(d) of the 1934 Act; or have filed a registration statement under the 1933 Act that has not yet become effective” (Cohen & Qaimmaqami, 2005).
Section Two …show more content…
The purpose of the board is to supply independent oversight of public accounting firms providing audit services. Furthermore the board registers auditors, terms the specific processes and procedures for compliance audits, inspects and polices conduct and quality control, and enforces compliance with the exact dictates of the Sarbanes-Oxley act. Title II institutes auditor independence in order to limit conflicts of interest. It also delivers new auditor approval obligations, reporting requirements, and restricts auditing companies from supplying non-audit services for the same clients. In Title III corporate responsibility is established; this means senior executives take individual responsibility for the accuracy and completeness of corporate financial