ACCOUNTING INFORMATION SYSTEMS
Abstract
The Sarbanes-Oxley Act was introduced to reduce fraudulent activities which were very common. It was as a result of the collapse of several companies which existed before. The use of accounting information system has reduced the occurrence of accounting fraudulent activities. Most companies hire external auditors so as to ensure that the financial reports are accurate and of quality. The internal control procedures are monitored by the auditors as well as the management. They are contained in Section 404.The section had an impact on small businesses as they could not afford the auditors fees. PCOAB was created to ensure the accuracy of auditors’ reports. There have been changes in the auditors’ reports after the Sarbanes Act was enacted.
An accounting information system (AIS) is a method used for processing financial data. The system is essential for tracking accounting activities with technology resources. The reports are used by management as well as by creditors, investors and tax authorities. The systems support accounting activities including auditing, tax and managerial accounting.
Sarbanes - Oxley Act
This paper presents an analysis of the Sarbanes Act (SOX). The Act was passed in 2002 by the United States Congress. The aim of the Act was to protect the investors from possible fraudulent activities that can occur within the corporations. The Act enacted strict reforms so as to improve financial reporting and also prevent fraudulent activities. The SOX was enacted due to the scandals that had occurred earlier. The scandals were such as Enron, Tyco and WorldCom. They affected the investors’ confidence in financial statements and hence required an overhaul of the regulatory standards. The top management of any corporation must certify the accuracy of their financial information.SOX also increases the roles of the independence of the auditors who periodically review the financial statements....