Sarbanes-Oxley Act of 2002
Lauren Windley
ACC/561
November 3, 2014
Jared Jones
Sarbanes-Oxley Act of 2002
Ethics is what it boils down to when speaking of the Sarbanes-Oxley Act of 2002. “In recent years the financial press has been full of articles about financial scandals at Enron, WorldCom, HealthSouth, and AIG. As more scandals came to light, a mistrust of financial reporting in general seemed to be developing” (Kimmel, Weygandt, & Kieso, 2011). Investors, regulatory commissions, and lawmakers around the United States were fearful that if the people lost their faith in investing that the economy would crumble. “In 2002, Congress passed the Sarbanes-Oxley Act to reduce unethical corporate behavior and decrease the likelihood of future corporate scandals” (Kimmel, Weygandt, & Kieso, 2011). SOX was created to keep major financial firms and institutions honest about the health of their business. “The Act mandated a number of reforms to enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud, and created the "Public Company Accounting Oversight Board," also known as the PCAOB, to oversee the activities of the auditing profession” (U.S. Security and Exchange Commission, 2014). The act also included time specific deadlines that information needs to be submitted for filing, as well as having the CEO and CFO sign off on all financial statements. “The Sarbanes-Oxley Act is arranged into eleven titles. As far as compliance is concerned the most important sections within in these are often considered to be 302, 401, 404, 409, 802, and 906” (The Sarbanes-Oxley Act, 2006).
Section 302 pertains directly to corporate responsibility for financial reports as stated earlier, “the signing officers are responsible for internal controls and have evaluated these internal controls within the previous ninety days and have reported on their findings” (The Sarbanes-Oxley Act, 2006). This is a measure in effect to...