I would appreciate your expert advice how to respond to the following:" Assess the effectiveness of Sox legation:
1) Brief historical summary on Sox enactment
2) The key ethical components of the Sox
3) Social responsibility implications regarding mandatory publication of corporate ethics.
4) One of the main criticisms of SOX is that its implementation presents an unfair burden or smaller organizations.
Do you agree or disagree with this statement? Why?
5) How might you suggest improvement of the Sox legislation.
Effectiveness of Sarbanes Oxley Legislation
Historical Summary on SOX
Sarbanes Oxley Act, established in 2002 established new requirements for corporate boards, officers, and auditors of public companies. It was created to protect investors from accounting fraud especially those related to sale and purchase of shares of publicly held companies. Before SOX, companies used to manipulate this data to show that company is doing well and it will be more beneficial to invest in their companies. With accounting scandals by well-known companies like Enron, Tyco and WorldCom, there was significant loss of investor confidence. With SOX, strict laws were created which mandated certain forms of financial disclosures especially those related with financial position of the company, i.e. earnings and profitability.
The Act requires all companies to include an internal control report in all financial reports. Through this legislation, accuracy of financial data is vouched and company has confidence in it as it has put adequate controls to ensure integrity of financial data. At the end of the year, there has to be an assessment by auditing firm for the effectiveness of internal controls. The auditing firm does that by reviewing policies, internal controls and procedures through a Section 4040 audit, conducted along with traditional audit. Hence, the Act aims to enhance corporate governance and strengthen corporate responsibility. It is done by ("Sarbanes-oxley essential information", n.d):
Formalizing and strengthening internal controls
Designing and implementing new controls to ensure that financial reporting has full disclosure
Ensuring that corporate governance is done in a transparent manner
Ethical Components of SOX
The Securities and Exchange Commission released its code of ethics to be implemented under Sarbanes Oxley Act. The code of ethics aims to deter wrong practices and promotes ethical conduct by organizations. It also ensures fair, accurate, timely and comprehendible reports and other documents filed by the organization for public communication. Through ethical code, documents by organizations have to be compliant with government rules and regulations and federal and state laws. It is obligation for all organizations that have to file ...
Different aspects of SOX are discussed.
How has the Sarbanes-Oxley SOX Act impacted an organization
How has the Sarbanes-Oxley SOX Act impacted an organization? Can you give me an example Please. ThanksView Full Posting Details