What Is the Objective or Goal of Sarbanes-Oxley Act
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SARBANES OXLEY ACT – OBJECTIVES OR GOALS
The main objective of the Sarbanes Oxley Act is to make sure that all the corporate work with transparency and also provide full disclosures of any kind of information from time to time. The Act introduced rigid new rules having a stated objective: “to protect investors by improving the correctness and reliability of the disclosures made by corporate in pursuance of securities laws.”
Basically there are major two objectives of the act, i.e. to ensure transparency and accountability by implementing compliance as per Sarbanes Oxley Act. These objectives are to be adhered to even at the cost of fine or punishment or both. The transparency purpose is attained by ensuring proper disclosure of financial information, by following the guideline of Generally Accepted Accounting practices, making available the financial details of all the transactions which have not been mentioned in the balance sheet. This objective can also be attained by the disclosure of financial & non-financial control measures which is in force in every company. Also certification by public of the financial measures & internal controls help fulfill the objectives of the Act. Some responsibilities given to the audit committee shall also be helpful in fulfilling the objectives of the Act.
The Sarbanes-Oxley Act aims to attain the following goals:
To restore the confidence among investors for public accounting and publicly traded securities.
Bring high levels of awareness among people as well as accountability ensuring moral business practices.
The goals of the Act are far-reaching and seek to re-establish market integrity & investor confidence. As a result, the reforms in the Act cover each and every part of the nations capital markets. It affects every reporting company be it domestic or foreign including their officers and other key participants. The other objectives of the act can be laid down as below:
To enforce & strengthen the federal securities laws.
To bring back confidence & fortification in the auditing profession.
To strengthen the disclosures and financial reporting made by the corporate
To bring about improvement in the performance of the accounting firms, attorneys and research analysts of the corporate body
To ensure the improvement of responsibilities taken by the executives of the corporate
To conclude, the basic objectives of the Sarbanes-Oxley Act, is to increase transparency in the accounting systems of public companies, to ensure that the process of auditing to be independent