The Sarbanes Oxley Act of 2002 was created by Senator Paul Sarbanes and Representative Michael Oxley following scandals like Enron. The act does not apply to privately owned businesses, however many businesses still adhere to the act in order to meet international standards.
The Sarbanes Oxley Act is made up of different sections known as titles. Title I establishes the Public Accounting Oversight Board. Title II is Auditor Independence. Title III is Corporate Responsibility. Title IV is Advanced Financial Disclosures. Title V is Analyst Conflict of Interest. Title VIII is Corporate and Criminal Fraud Liability. This means that the principle financial officer and the principle executive officer must certify each quarterly or annual report that meets the following criteria: the reports do not contain untrue statements of material facts, or omit to state a material fact. Section 404 consists of Management Assessment Internal Controls. This section states that it is the responsibility of management to maintain adequate control of financial reporting procedures. The report contains the reporting procedures as well as its effectiveness. It also states that accounting firms that prepares or issues audit reports attest to the reports prepared by management. Section 806 offers protection for employees of publicly traded companies who provide evidence of fraud.
I do not feel that the Sarbanes Oxley Act of 2002 will prevent future cases of fraud. One reason why I believe so is because of the American Automotive Industry Bailout. One reason I believe so is because the American “big three” were doing horrible in sales during this time due to their irresponsible line up of gas guzzling cars when fuel prices were continuing to rise. By bailing out these companies, we were truly going against the fundamentals of capitalism; survival of the fittest. I also feel that it was a form of fraud since it helped out many shareholders and executive staff etc. while the American tax...