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Criminal Penalties Under the Sarbanes-Oxley Act

Read and review the excerpts from the Sarbanes-Oxley Act in the Appendix of the textbook (The Legal Environment of Business and Online Commerce, Henry Cheeseman, Seventh Edition). Identify three of the criminal penalties that can be charged under the Sarbanes-Oxley Act. How do these sections of the Sarbanes-Oxley Act promote ethical behavior by corporations?

Your response should be at least 200 words in length. All sources used, including the textbook.

Textbook is: Henry Cheeseman, The LegalEnvironment of Business and Online, Seventh Edition Commerce.

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Solution Preview

First, I want to clarify the auditing process the Sarbanes-Oxley Act is regulating. The purpose of an audit is to evaluate the fairness of the presentation of the financial statements. After the auditor gathers all the evidential information, she must render a decision regarding the financial statements. Four different types of reports can be given to the client; unqualified, qualified, disclaimer, adverse opinion. An unqualified opinion indicates that based on the auditor's opinion and the evidence the financial statements have been fairly presented by the company. A qualified opinion states except for listed elements in the audit report the financial statements are fairly presented by the company. A disclaimer of opinion represents that there has been a severe scope limitation during the audit and based on the evidential material discovered the auditor will not issues and/or express an opinion regarding the financial statements audited. An adverse ...

Solution Summary

The solution discusses criminal penalties under the Sarbanes-Oxley Act.