1. The implications of Sarbanes-Oxley for corporation v/s small
businesses
The Sarbanes–Oxley Act of 2002 is considered a federal law in the
United States that mandates specific practices in reporting and
keeping financial records for corporations. The research report shows
that SOX provisions are helpful in increasing audit, accounting, and
other general compliance costs in organizational settings. It has been
identified that the small businesses have very few resources, receive
little investor attention relatively, and enjoy lesser-scale economies.
Thus, the small businesses derive lower average benefits and
experience higher average costs from SOX provision (Gates &
Leuschner, 2007). On the other hand, the SOX provisions has
implemented specific rules for the corporations that include setting
new auditor standards with an aim to transfer responsibility for the
accurate and complete handling of financial reports and reduce
conflicts of interest. Moreover, this provision is also reviewing their
accounting practices (Lutkevich, 2020).
2. Impact of Sarbanes-Oxley and other ethical regulations on
work
The introduction of Sarbanes-Oxley has brought a revolution by
sweeping financial and auditing regulations for many organizations or
workplaces. This act has given the main focus on four specific areas
increasing criminal punishment, corporate responsibility, accounting
regulation, and new protections (Lutkevich, 2020). the basis of my
professional goal, the introduction of Sarbanes-Oxley will have a
great impact on my work. I believe this act will be helpful and
beneficial for the present companies and stakeholders because it will
be easy to acknowledge further improvement areas by the leaders as
well, as it could better the financial performance or practices.
However, the introduction of Sarbanes-Oxley is ultimately affecting
the shareholders as this is reducing company performance and
earnings.
3. Reliability of financials
The main aim of having a reliable financial statement is to give the
financial information to the customer accurately so that they can use
it to make the right financial decisions (McIntosh, 2021).
However, there are certain steps that could be used to ensure that
financials are reliable. These steps include hiring an external auditor
to look after the finance, adopting adequate internal controls,
reconciliation of external and internal records; accurate data entry;
and checking out for income statement and balance-sheet errors
(McIntosh, 2021).
References
Gates, S. M., & Leuschner, K. J. (2007). In the name of
entrepreneurship?: The logic and effects of special regulatory treatment
for small business. Rand Corporation.
Lutkevich, B. (2020, December 11). What is the sarbanes-oxley act?
definition and summary. SearchCIO. Retrieved June 22, 2022, from
https://www.techtarget.com/searchcio/definition/Sarbanes-Oxley-
Act
McIntosh, K. A. (2021, November 20). Relevant vs. reliable financial
statements. Bizfluent. Retrieved June 22, 2022, from
https://bizfluent.com/info-8298111-relevant-vs-reliable-financial-
statements.html
