The needs and implications of the Sarbanes-Oxley Act of 2002

The needs and implications of the SARBANES-OXLEY ACT OF 2002 GENERAL BACKGROUND The Enrons and Worldcoms do it clear that the fiscal markets can non be left below the armorial bearing of integrated transmitors and officers, without oversight authority. The incorporated abuses and fraud that Enron exemplified, while not a first in the fiscal markets, they were certainly a first in injury of the magnitude of the losses to stockholders and the authority the public reposed in the pecuniary sector (Bequai 2003). The allegation against Enron was that it utilise special purpose vehicles for $8.5 wholeness million million million of deals to hide real level of debt (Student Accountant 2002, p.9). WorldCom was alleged to rock treated over £3.8 one million million revenue costs - network maintenance - as crownwork expenditure to inflate lollipop. Also, Loans of $2.5 billion were misreported (Student Accountant 2002, p.9). Both companies came under criminal investigation, went bankrupt - WorldCom beingness the biggest ever bankruptcy - and the listener for both companies (Anderson) was convicted for obstruction of justice. The Sarbanes Oxley part of 2002 was instigated as a direct result of the Enron, WorldCom and other accountancy scandals in the US. It does not affect UK companies unless they are subsidiaries of US firms or are listed on US stock exchanges.

The act combines bills forward drafted by US senator capital of Minnesota Sarbanes and Congressman Michael Oxley. It is de sign to carry out corporate accountability by new requirements, backed by stiff penalties. Under the Act, forefront Executive Officers (CEOs) and Chief financial Officers (CFOs) must personally manifest the accuracy of financial statements, with a maximum penalty of 20 years in send out back and a $5m comely for false statements (It Week 2003) President George W. pubic hair signed the Act on 30 July 2002 (the Enactment Date). This watershed rule and the resulting regulations, will... If you want to bear a full essay, battle array it on our website: Orderessay

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