Essay About Serbanes-Oxley Act And 2016Steve Corderthe Sarbanes Oxley Act

The Serbanes-Oxley Act of 2002
The Sarbanes Oxley Act of 2002Rebbecca GarrettACC 561April 11, 2016Steve CorderThe Sarbanes Oxley Act of 2002“An Act: To protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes (107th Congress of United States of America, 2002).”  The opening statement of the act itself portrays the intent of the act and what Congress hoped it would accomplish for the business world. The act also instated a governing body in the form of the Public Company Accounting Oversight Board to ensure that the laws developed as a result of the act were followed by all publically traded companies. What made the Act Necessary?The Sarbanes-Oxley Act of 2002 became necessary when widespread corruption in some of the nation’s largest companies became rampant and unleashed a widespread public panic and long-lasting mistrust of financial and investment markets (Green, 2004).  One of the most recognizable names in the market crash in 2001 and 2002 that led to the development of the Sarbanes-Oxley Act of 2002 was Enron Corp. The CFO of Enron, Andrew Fastow, “cooked the books” at Enron to present a financial stability within the company that was not true (Green, 2004). He kept separate logs of transactions that were not shared with Shareholders or the board of directors and was guilty of using company funds for insider trading and embezzlement (Green, 2004). A government inquiry revealed similar situations at other companies such as WorldCom, Adelphia Communications, and Global Crossing (Green, 2004). Enron was at the top of the list for the reasons that the Sarbanes-Oxley Act of 2002 became necessary but it was only one of many publically traded companies that led the U.S. government to believe that someone or something, such as an act of congress, needed to govern these entities (Green, 2004).Aspects of the Sarbanes-Oxley Act of 2002Upon initial investigation, the Sarbanes-Oxley Act of 2002 is a 66 page detailed list of all of the illegal and fraudulent acts a company can commit as well as an understanding of what each entails. Of course, its dedicated purpose is to be a set of rules and laws outlawing and barring companies from committing the acts listed within its pages. It begins with a table of contents to outline what will be found in its 66 pages. The table is a long one and includes eleven separate titles which, in turn, include several subsections (The 107th Congress of the United States of America, 2002).The first Title of the Act, with nine subsections, is entitled “Public Company Accounting Oversight Board” also known as the PCAOB (The 107th Congress of the United States of America, 2002). Its nine subsections outline the “101: establishment of the PCAOB, 102: registration with the board, 103: auditing, quality control and independence standards and rules, 104: Inspections of registered public accounting firms, 105: investigations and disciplinary proceedings, 106: Foreign Public accounting Firms, 107: Commission Oversight of the Board, 108: accounting standards, and 109: funding (The 107th Congress of the United States of America, 2002,