The Sarbanes-Oxley Act was placed into law in 2002 after several
large corporate fraud scandals, such as Enron and WorldCom. The
law was enacted to require publicly traded companies to release fully
disclosed and accurate financial information and give investors
confidence in financial reporting by requiring a checks and balance
system. It implemented new rules, such as setting high standards for
auditors and requiring top executives to certify the accuracy of the
reports. The new laws had come with a high cost to adhere to the
standards and the penalties if there is any type of misconduct. This
has been an enormous financial burden on small businesses that must
pay the costs to ensure their financials are prepared accordingly. The
law has raised awareness of the ethical behavior of companies, which
has been a good thing. However, there is still a continuous struggle
to train and communicate ethical standards to employees.
In my personal and professional career, the impact of the Sarbanes-
Oxley Act and any other accounting laws will be tremendous. As an
accountant, I want my work to be transparent and adhere to the
highest accounting standards. Financial reports need to be reported
accurately to not only investors but to bankers and a company's
executives. Financial statements provide company health and growth
information that may be necessary at any time.
