wk 6

W6 DQ1 100-150 words

Why did the Sarbanes–Oxley Act become law? In your opinion, does it provide any real protection to investors? Why or why not?

Reply to Responses 75-100 words

A Destiny Carlisle

Hello Class,

The Sarbanes-Oxley act is an interesting case, I have not heardB of this act until the article attached. To my understanding this act deemed necessary and seems to have set the tone for the business development structure today. The act was approved in 2002 in response to the Enron and other crises that were similar, requesting that there be a required procedure of control to help prevent false financial information. This required for businesses to have annual audits and adhere to a strict policy governing the protection or safeguard of financial information, accounting fraud and increased major accountability on companies. Its hard to determine if the Act is actually protecting the investor, because it seems that if anyone goes against the stockholder's, they are known as a “whistleblower”, but it seems that its more so for the protection of the business or stockholder than the investor and it was created to limit the possible errors. 

B Alan Gonzalez

Class,

To protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and to improve auditing and public disclosure in response to several accounting scandals in the early-2000s. "Lawmakers created the legislation to help protect shareholders, employees and the public from accounting errors and fraudulent financial practices.The Act primarily sought to regulate financial reporting, internal audits and other business practices at publicly traded companies. However, some provisions apply to all enterprises, including private companies and nonprofit organizations" (Lutkevich, 2020). Research shows primarily blames Enron Corp, WorldCom and Tyco International, as the company's fraudulent practices and its executives' criminal activities came to light, which in turn the Sarbanes-Oxley Act (SOX) federal act was passed in 2002. The cost of SOX’s greater internal control and disclosure requirements balanced with the benefit of greater financial statement accuracy is a matter of policy still subject to debate (Cornell Law School, 2021).

In my opinion, I do believe that SOX does provide protection to investors, as independent auditors did their fair share of adapting to SOX’s new guidelines as well. Most notably, they went from being self-regulated to being government-regulated through the Public Company Accounting Oversight Board (PCAOB). 

C Christopher

Class,

Why should you company initiate steps to protect itself against investors? What examples can you think of when a company purchase turn out to be catastrophic?