The SOX Act Analysis and Discussion
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- Analyze the underlying causes for the creation of the Sarbanes-Oxley Act to determine which played the most significant role in the creation of the act. Explain your rationale.
- Discuss what underlying causes may have been overlooked when the Sarbanes-Oxley Act was created. Provide specific examples to support your response.
- Discuss the ramifications of the Sarbanes-Oxley act in the short run. Provide specific examples to support your response.
- Discuss the ramifications of the Sarbanes-Oxley act in the long run. Provide specific examples to support your response.
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Solution Summary
This solution analyzes the Sarbanes-Oxley Act and gives students the reasoning behind why legislators created this Act in response to the financial frauds perpetrated by companies such as Enron and WorldCom.
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Analyze the underlying causes for the creation of the Sarbanes-Oxley Act to determine which played the most significant role in the creation of the act. Explain your rationale.
Three of the most important causes for the SOX Act were the failure of auditors at prominent accounting firms to discover fraud because of conflicts of interests, captive board of directors, and conflicts of interests among securities analysts. The firms prior to SOX were responsible for certifying company's financial statements while subsequently maintaining lucrative non-auditing consulting contracts with the same companies. Therefore, these conflicts of interests were the catalyst for some of the biggest frauds in U.S. history such as WorldCom and Enron. The passage of SOX eliminated this atrocious and dangerous conflict of interest ...
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- Associates of Arts , Lone Star Community College
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- Masters of Science, Kaplan University
- Masters of Science , Kaplan University
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