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SOX, DuPont Analysis, Liquidty Questions, and SEC

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What are three primary roles of the U.S. Securities and Exchange Commission (SEC)?

How does the Sarbanes-Oxley Act of 2002 augment the SECâ??s role in managing financial governance?

Do you think businesses became more ethical after Sarbanes-Oxley was passed?

Provide examples to support your answer

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What ratios measure a corporation's liquidity?

What are some problems associated with using such ratios? How would the DuPont analysis overcome these problems?

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Solution Summary

Detailed answers and examples to these questions

What are three primary roles of the U.S. Securities and Exchange Commission (SEC)?

How does the Sarbanes-Oxley Act of 2002 augment the SECâ??s role in managing financial governance?

Do you think businesses became more ethical after Sarbanes-Oxley was passed?

What ratios measure a corporation's liquidity?

What are some problems associated with using such ratios? How would the DuPont analysis overcome these problems?

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What are three primary roles of the U.S. Securities and Exchange Commission (SEC)?
The Securities Exchange Commission (SEC) regulates corporate accounting and its three main functions are to facilitate capital formation, maintain far and efficient markets, and to protect investors. The SEC helps to regulate the industry using the laws provided by Congress. In the example below the Sarbanes-Oxley Act is one of the legislative laws that the commission must oversee.
How does the Sarbanes-Oxley Act of 2002 augment the SECs role in managing financial governance?
The Sarbanes-Oxley Act (SOX) is a system that has changed the internal control system of companies. One function of internal controls is to ensure that a company's financial records and reports are accurate. Management must file a statement attesting to the quality of its internal control system, and auditors examine both the system and management's statement about it. Congress makes its wishes known through high-level regulation via laws ...

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    How would the Dupont analysis overcome some of these problems? The primary role of SEC is to regulate the securities market and ensure that it operates in a fair manner.

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    Kroszner (2014) argues that the conflict of interest questions were paramount, but the structural nature of things renders SOX irrelevant. The analysis of securities must be kept distinct from the investments that follow from them.

  • Financial Implications of the Sarbanes Oxley Act

    When companies submit financial statements to the SEC that have questionable material or that lack detail in an area, that area then goes under analysis/investigation by the SEC and PCAOB.

  • Congress and the Securities and Exchange Commission

    When there is a SOX investigation for noncompliance, it is a joint investigation between the SEC and the PCAOB. The SEC acts similarly with the FASB in a relationship of teamwork.

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