The ultimate criticism of the way that business conducts itself may be the Sarbanes-Oxley Act of 2002 (SOX). This bill was enacted as a response to a number of large and serious scandals involving major corporations and huge amounts of money. There is an old saying that cautions "if you don't police yourself, somebody else will."© BrainMass Inc. brainmass.com October 2, 2020, 5:06 am ad1c9bdddf
The SOX law is fair and it is also necessary. A few really significant events took place with those accounting scandals. Enron was a big company - huge, in fact. Many investors had their entire life savings invested in Enron. When Enron collapsed, it was large enough of a collapse to actually shake the world market. Investors lost money, creditors lost their money, employees lost jobs, retirees lost their pensions or parts of their pensions, and many other factors contributed, all with detrimental effects. Enron didn't just collapse - anything tied to money also collapsed right along with it.
Shortly after, we then watched WorldCom crumble in accounting fraud. At this point, the highest percentage of investors lost confidence in the markets than ever in history. We can go back to the Great Depression. Post-depression, we saw acts like the ...
This solution explains if SOX regulations are fair to businesses, and if there is a continuing need for regulation. The size of the business is also discussed in relation to ongoing SOX monitoring. A comprehensive discussion is provided.