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Sarbanes-Oxley Act

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The Sarbanes-Oxley Act of 2002 has been described as the most far-reaching legislation affecting business since the passage of the 1933 Securities Act. What are the specific portions of the legislation that affect the external audit profession, and how do they affect the profession? How does the legislation affect the internal audit profession? What are some activities that are implied in the legislation, as well as activities that will likely emerge as companies implement various provisions of the act? Do you believe the legislation enhances the power and prestige of the audit profession, or alternatively, does it decrease both the power and prestige of the profession? Explain.

Access the U.S. Securities and Exchange Commission (SEC) Web site, http://www.sec.gov. What is the most recent litigation brought by the SEC against a public firm or against an accounting firm? Read the abstract of the complaint and download the document filed with the court. Comment on the nature of the litigation. What is the most recent Staff Accounting Bulletin that provides guidance to the profession? What was the guidance?

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The Sarbanes-Oxley Act of 2002 has been described as the most far-reaching legislation affecting business since the passage of the 1933 Securities Act. What are the specific portions of the legislation that affect the external audit profession, and how do they affect the profession? How does the legislation affect the internal audit profession? What are some activities that are implied in the legislation, as well as activities that will likely emerge as companies implement various provisions of the act? Do you believe the legislation enhances the power and prestige of the audit profession, or alternatively, does it decrease both the power and prestige of the profession? Explain.

The provisions of the Sarbanes Oxley Act 2002 affect the external auditing profession in several ways. The Sarbanes Oxley Act 2002 increases external auditor independence. The external auditor firms will be directly monitored by the Public Companies Accounting Oversight Board. Registration is required. The external ...

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Sarbanes-Oxley Act and the PCAOB

The following comments summarize the beliefs of some practitioners about the Sarbanes-Oxley Act and the PCAOB.

The Sarbanes-Oxley Act is unnecessary regulation of the profession. The costs of requirements such as reporting on the effectiveness of internal control over financial reporting greatly exceed the benefits. These increased costs will discourage companies from issuing publicly traded stock in the United States. The regulation also gives a competitive advantage to national CPA firms because they are best prepared to meet the increased requirements of the Act. Three things already provide sufficient assurance that quality audits are performed without PCAOB oversight. They are competitive pressures to do quality work, legal liability for inadequate performance, and a code of professional conduct requiring that CPA firms follow generally accepted auditing standards.

a. State the pros and the cons of those comments.
b. Evaluate whether the Sarbanes-Oxley Act and PCAOB regulation are worth their cost.

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