Sarbranes Oxley Impact On Corporate America Essay

1468 words - 6 pages

Donahue 1
Jaime Donahue
Professor Phillip Miller
Principals of Management
12th, December 2012

Sarbanes-Oxley Act’s Impact on Corporate Business

Business scandals, Ponzi schemes and fraud are something we have all heard of. Over the years there have been many accounting scams from companies all over the world. We all remember one of the most publicized cases of fraud, Enron. For many years there has been fraudulent activity in many companies. Sarbanes-Oxley was established to prevent these types of scandals. Some believe it is not as valuable as once predicted, but is anything 100% preventable?

Prior to Sarbanes-Oxley Act, the Securities and Exchange Commission was ...view middle of the document...

This news sparked the Securities and Exchange Commission and a formal investigation began. By the end of 2001 Enron files for chapter 11 bankruptcy, the largest bankruptcy in U.S. history at that time, and leaves their employees with absolutely nothing. The many years those employees invested in their stock and pensions within the company were taken away by the fraudulent activity of the executive team, CEO’s and some people on the board of directors. These crimes resulted in
Donahue 2

millions of dollars stolen from the employees, prison sentence for the CEO and executives involved, a suicide by a vice chairman, and a death due to a heart attack of one of the CEO’s. Thankfully by 2011, because of an agreement between the prosecutors and the defense, Kenneth Skilling agreed to give back 42 million to be disbursed to the employees impacted by the devastation. Not nearly enough to completely repay the employees, but something was better than nothing. This scandal is also one of the many reasons that Sarbanes-Oxley Act was born. If there was more accountability put on the accounting teams, CEO’s, VP’s executive teams and board of directors, some of these men and women may have thought twice before committing fraud. The former CEO Jeffery Skilling, received 24 years in prison for his involvement and conspiracy fraud, false statements and insider trading.

Sarbanes-Oxley is not a 100% guarantee that fraud will not happen in a business, it just makes it harder to do. It raises red flags and makes people personally accountable for their actions. It also forces the CEO’s and CFO’s to personally vouch for the accuracy of the quarterly and annual reports. Another impact Sarbanes-Oxley has on companies is “requires businesses to establish a code of ethics or explain why they have not; and established the Public Company Accounting Oversight Board, which now regulates auditors and accounting firm”(Strain). SOX has cost companies hundreds of millions annually to implement and enforce. “Sarbanes –Oxley is thought by many as the answer to fraud” however it “was intended to restore faith in the integrity of corporations and executives” (Coenen). There is plenty of crime continuing to happen in companies all over the world. Sarbanes-Oxley cannot prevent all kinds of fraud, it can just keep a close watch and be the second eye on the financial audits that companies have.

The impact Sarbanes-Oxley Act has had on corporate America is great. “SOX has lead to greater internal control of financial reporting and increased expertise and independence among more-focused boards, committees and directors” (Maleske). It prevents and makes accounting fraud much harder to do, but not impossible. It takes away the excuse from top executives that they were unaware because they are not an accountant. It also has given investors somewhat of a piece of mind. It certainly doesn’t guarantee the investment will be good, but it allows the investor to have a peace...

Other Essays Like Sarbranes-Oxley Impact on Corporate America

Impact of Unethical Behavior Essay

565 words - 3 pages Impact of Unethical Behavior Article Analysis ACC/291 Principles of Accounting II September 18, 2012 Thomas House Impact of Unethical Behavior Article Analysis Reporting financial statements within a business or company is more than a must; it is a necessity to keep ones business up and running. If one were to report false information on any kind of financial statements it then could be costly for the company or

Sarbanes-0axley Act Essay

629 words - 3 pages established to ensure compliance with those policies, plans, procedures, laws, and regulations which could have a significant impact on operations and reports; • Review the means of safeguarding assets and, as appropriate, verify the existence of such assets; • Appraise the economy and efficiency with which resources are employed. The Sarbanes-Oxley Act has had great effects on financial accounting and auditing practices but nothing is perfect

Sarbanes-Oxley

1450 words - 6 pages consolidation of public accounting firm, the present and future impact of the condition etc. Not only that, there must be studies and reports on violators and violations, investment banks, credit rating agencies, enforcement acts. 8. Corporate and Criminal Fraud Accountability: This title may be cited as the ‘‘Corporate and Criminal Fraud Accountability Act of 2002’’. It includes sections for criminal penalties for destruction, alteration

How Does the Sarbanes-Oxley Act, Affect

2457 words - 10 pages -Oxley is already having a profound impact on corporate governance practice. Although the legislation is aimed at public companies, non-public companies are by no means immune to the need for improved governance and internal control processes. Non-public entities should consider taking a cue from what is happening at public firms and make sure their own practices are sound and reflect a strong focus on financial disclosure and integrity. The

Sarbanes Oxley

1024 words - 5 pages critical role in implementing the act and in helping to restore confidence in America’s corporations and financial markets” (August 1, 2002, Memorandom). Sarbanes–Oxley contains 11 titles that describe specific mandates and requirements for financial reporting. Corporate responsibly title III, It enumerates specific limits on the behaviors of corporate officers and describes specific forfeitures of benefits and civil penalties for non

Sarbanes-Oxley Act

560 words - 3 pages to stakeholders and a crisis in investor confidence. Sarbanes-Oxley aims to enhance corporate governance and strengthen corporate internal controls and accountability. If a company isn’t in compliance what happens depends on which section of the act they’re out of compliance with. Non-compliance penalties range from the loss of exchange listing, loss of D&O insurance to multimillion-dollar fines and imprisonment. It can result in a lack of

Sarbanes-Oxley Act

1617 words - 7 pages 107-204) on Tuesday, July 30, 2002. Congress presented the act to the president on July 26, 2002, after passage in the Senate by a 99-0 vote and in the House by a 423-3 margin” (The sarbanes-oxley act). A new federal law was passed in reaction to corporate scandals such as the Enron, WorldCom, Tyco cases. The Sarbanes-Oxley Act puts extreme pressure on companies accounting practices and annual reports. Simply put, the act was created to protect

White Collar And Organized Crime

1014 words - 5 pages . Many “excuses” are given by criminals as to why they commit these crimes. Some do not believe that what they are doing has an effect on other people and some are trying to stay ahead in a competitive market. Either way, they are only looking at what is to gain rather than the consequences on society. In 2002, President Bush signed into law the Sarbanes-Oxley Act which created provisions that are designed to punish and deter corporate and

Accounting Information Systems Research Paper

3295 words - 14 pages of 2002 In the aftermath of several corporate financial reporting scandals involving large publicly held companies such as Enron, WorldCom, and Tyco, the United States Congress passed the Sarbanes-Oxley Act of 2002 and enacted it into law on July 30, 2002. The Sarbanes-Oxley Act (SOX) takes its name from its two primary congressional sponsors, Representative Michael Oxley (R-OH) and Senator Paul Sarbanes (D-MD) (Hoffman, 2005, p. 3). SOX

Health South: the Scrushy Way Introduction

3589 words - 15 pages 17th ). Attitude, Machiavellianism and the Rationalization of Misreporting. , , 242-248. Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1222972 Rashkover, B. W., & Winter, C. B. (2005, 7th October). The impact of Sarbanes–Oxley on SECenforcement in public company disclosure cases — Part I. , 2, 312-319. Retrieved from http://www.researchgate.net/publication/233701204_The_impact_of_Sarbanes

Determining Perfect Position

1146 words - 5 pages de 2010 de http://www.time.com/time/business/article/0,8599,263006,00.html Keefe, T. J., & Tipgos, M. A. (2004, December). A Comprehensive Structure of Corporate Governance in Post-Enron Corporate America. Online The CPA Journal Sridharan, Uma & Dickes, Lori & Caines, Royce (2002). The Social Impact of Business Failure: Enron. American Journal of Business. Retrieved from BSU.com. CERTIFICATE OF ORIGINALITY: I certify that the

Related Papers

The Impact Of Transfer Pricing On Corporate Disclosues

3494 words - 14 pages The Impact of Transfer Pricing on Corporate Disclosures Written By: Roger Hsueh Aiming to plug tax collection leaks, impose reasonable tax burdens and bring Taiwan in line with the international trend, toward the end of 2004 the Ministry of Finance issued and put into effect "Income Tax Audit Standards for Transfer Pricing Inconsistent with Arm’s Length Transactions". Following the implementation of the transfer pricing audit standards, not

Describe The Impact Of Mc Carthyism On America

407 words - 2 pages During the 1950s, the American people began to develop a fear of internal communist subversion. The Korean stalemate, the "loss" in China, and the development of a Soviet atomic bomb were setbacks in the American battle against communism. Searching for people to blame, the American people were attracted to the idea of a communist conspiracy within American borders. This resulted in the era known as McCarthyism, where the frustration and fear of

Did The Post War Economic Boom Have A Positive Or Negative Impact On America?

859 words - 4 pages was the child and after the World War II children did not need to go to work or war. So there was an invention of teenage who listen to rock and roll but will rebel without a cause. These were some of the negative impact on the American society in the post war economy boom. Other negative impact is that when suburb continues to grow the cities declines and was inhabited by poor minority groups of ghettoes. So the poverty and crime in the city

The Cost Of Being A Ceo Or Cfo

1367 words - 6 pages Sarbanes-Oxley Act but also it is inadvertently punishing those who are not corrupt and never will be. The regulations of the Sarbanes-Oxley Act and the accountability expressed in the act are affecting executive positions in corporate America especially that of the CFO. More emphasis is being placed on the credibility of any company?s top executives. Much of the scrutiny is placed upon the CFO whose primary responsibility is the company?s