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sox By Andre Mcnally

 

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http://www.accountingweb.com/article/has-sox-been-successful/219796

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http://en.wikipedia.org/wiki/Sarbanes–Oxley_Act

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http://digitalcommons.liberty.edu/cgi/viewcontent.cgi?article=1083&context=honors

Running head : EFFECTIVENESS OF SOX IN AVOIDING FUTURE FRAUD SOX Effectiveness Andre McNally Acct 561 Instructor: MONIQUE SMALLING Sarbanes oxley Act (SOX) was enacted in july 30 during the year 2002.It is always commonly reffered to as public company accounting reform and investor protection act which is found in the Senate and the Corporate and Auditing Accountability and Responsibility Act found in the manin house. SOX is a law in the United States federal systmem that is aimed at setting advanced , enhanced and iproved standards for all companies in the United States.The name came after the people eho sponsored the bill that is senator Paul Sarbanes and Representative Michael G Oxley. SOX implementation as a result has forced top management in most of the public companies in the United States to certify the accuracy, accountability and transparancy in matters relating to finance.If violated as a result of fraudulent financial activities it can lead to savere and rampant punishment.In addition for the last few years Sarbanes Oxley Act has raised the autonomy of the outside auditors who normally review the accuracy most of the corporate financial statements such as balancesheet, cashflow statement ,and profit and los accounts statement and increased the oversight role of boards of directors (Khan, 2014). The bill came to operation as a result of reaction from majority of the corporate and related accounting skamishes and scandals which includes those affecting Worlcom, Enron, Tyco international and peregrine systems. This scandal influenced the investors to spend more money close to billion shilling dollars, this has made the public to loose confidence and hopes in the United States stock markets.This paper shall discuss them major aspects of the regulatory environment which will protect the public from fraud within corporations.Special attention is paid to the SOX requirement; along with evaluating whether Sox will be effective in avoiding future frauds or not (Liam, 2010). Considering that the implementation of SOX has been very costly and time-consuming, it is of great importance for all the participating members to know whether SOX has been effective in preventing restatements and irregularities that could lead to a materially misstated financial report. We try to study whether the SEC was powerful enough to regulate the accounting practice efficiently through the implementation of SOX, and if it was the adequate control measure to combat corporate fraud. The Sarbanes Oxley Act (SOX) of 2002 was enacted following a series of failures involving various functions designed to protect the interests of the investing public. Containing several highly controversial provisions, SOX created a total revision of the regulatory framework for the public accounting and auditing profession and provided guidance for strengthened corporate governance. It was considered to be the most far-reaching legislation affecting public corporations and their independent auditors since the 1930s.SOX is widely credited for strengthening at least two major areas of investor protection (Morgenson, 2013): ? CEO and CFO responsibility and accountability for all financial disclosures and related controls; ? Increased professionalism and engagement on the part of corporate audit committees. Regulatory environment involves a number of laws and regulations that has been developed by federal, state, and local governments in order to limit control over business practices. The regulatory environment plays a critical important role in the smooth cordination and operation of the financial sector and in the efficient management and integration of capital inflow and capital outflow and individuals domestic savings. The value of the claims of financial institutions and organizations on borrowers is determined by the certainty of legal rights, coupled with the predictability and speed of their fair and impartial enforcement (Khan, 2014). Legal and regulatory frameworks that empower the regulator and govern the conduct of market participants form the cornerstone of the orderly operation and development of the financial section. Regulatory compliance has always been a part of doing and operating business.Almost in most of the industries there are always a number of government and regulations are many that has been around for a long period of time that were developed to help protect the public from fraud such as; state filing requirements or fair lending laws and most businesses .have meet the standards of these long standing regulations. The United States Securities and Exchange Commission is developed to help protect investors, maintain fair, orderly, and efficient markets, an At the time of its enactment in the wake of corporate accounting scandals the Sarbane- Oxley Ac (SOX) t of 2002 was the most sweeping financial regulation since the Securities Act of 1934.Many people in the United States believe that the act shall make a great difference in preventing future fraud (Lucas, 2013).They further see the act as a too much added regulation that shall lead to high spending and unnecessary use of financial resources.In addition most individuals also believe that this SOX Act diverts and switches management of corporations attention from the major objectives and goals which includes competition, innovation and profit generation by the organizations.The effectiveness of Sarbanes Oxley has certainly been called into question. There are supporters on both sides of the debate. Some people continue to question its overall value, citing, as an example, its failure to prevent the situations that led to the financial crisis of 2008. At times overlooked in the debate about SOX are the contributions it has so far made in generating a greater focus on improved corporate governance and stronger ethics and compliance programs. Needed improvement in audit quality is a continuing concern in most of the organizations implying that SOX has not been adequately effective.Individuals can always conclude that SOX Act has only placed an undue burden on our public companies and stifled our economic growth. The Act’s costs have greatly outweighed its benefits and thus needs reformed. Its effects have been perhaps more pronounced by the current financial crisis and the slow economic recovery (Abok, 2012). Reference Abok, K. (2012). Financial Accounting, 6th Edition. Wiley. . London: Oxford Publisher. Khan, S. (2014). "Sarbanes–Oxley Act of 2002 Five Years On: What Have We Learned?". Journal of Business & Technology Law: 333. Liam, C. (2010). America Robbed Blind. NewYork: Macmillan publisher. Lucas, N. (2013). The Sarbanes Oxley Act: "Big Brother is watching" you or Adequate Measures of Corporate Governance Regulation? 5 Rutgers Business Law Journa. 23-25. Morgenson, G. (2013). "Regulation and Bonding: The Sarbanes-Oxley Act and the Flow of International Listings". Journal of Accounting Research. . EFFECTIVENESS OF SOX IN AVOIDING FUTURE FRAUD 2 EFFECTIVENESS OF SOX IN AVOIDING FUTURE FRAUD 3 EFFECTIVENESS OF SOX IN AVOIDING FUTURE FRAUD 4 EFFECTIVENESS OF SOX IN AVOIDING FUTURE FRAUD 5 EFFECTIVENESS OF SOX IN AVOIDING FUTURE FRAUD 6