DATE: July 19, 2016
SUBJECT: Contract Law Drafting Exercise
The Sarbanes-Oxley of 2002 has revolutionized how business operations are now evaluated for the best standards in governance and corporate responsibility.
The SEC wanted to create a new model for accounting oversight which prior led to the demise of several companies and the U.S. economy for engaging in illegal accounting practices. Sarbanes Oxley was an act named for Senator Paul Sarbanes and Representative Michael Oxley who sponsored the act. The oversight had provided new titles under the Sarbanes Oxley act 2002. Congress had agreed with President Bush to enact the policy to provide a higher degree of compliance to ethical standards to set a higher standards for corporate responsibility and governance. New listings were created for the various stock exchanges. Governance standards, accounting rules established a new business environment. When these ethical measures are not met it is then in the hands of the U.S. government to intercede. Congress gave the SEC more authority to act against illegal activity.
One of the most important principles of the Sarbanes-Oxley of 2002 has to do with the governance principle of regulatory compliance requirements. One was to allow public auditors perform the audits without having anyone on the audit committee to be employed or have an interest with the company to review the company’s finances with higher accuracy. Another requirement is to have one of the auditors to be a financial expert with a high degree of expertise in the Generally Accepted Accounting Practices (GAAP). Another requirement is that the auditor report to an independent committee. It is also a requirement that the auditor not have a close relationship with the CFO or the financial staff. The auditor must also rotate from doing the audits every five years and also keep records for seven years. The financial statements must also be attested by the CFO and CEO of the company...