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Sarbanes Oxley Act (SOX) Effective Control Systems

Will SOX lead to a more effective control system at most publicly traded US companies? Why or why not?

If SOX had been in effect, would it have prevented the meltdowns at Enron, Tyco and Worldcom, for example? Why or why not?

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Yes. SOX will lead to better control systems. It already is. The Sarbanes Oxley Act is designed to have outside sources monitor an organization's control systems. SOX is corporate accountability. During the time period between 2000 and 2002 there were a series of large corporate frauds (Enron, WorldCom and Tyco). SOX primarily solves the problem of conflict of interest and incentive compensation issues. SOX serves as the regulations of ...

Solution Summary

This solution provides information in regards to SOX and if it will lead to a more effective control systems at publicly traded organizations. The solution also discusses whether or not Enron, Tyco and Worldcom incidences would or would not have happened.