Public Policy Analysis

The Sarbanes-Oxley Act

The Congress implemented the Sarbanes-Oxley act in an effort to curtail the corporate fraud on a large scale. The law’s main objective is to gain higher possible accountability from the management boards in the reporting of data. Significant emphasis was employed on companies founding, evaluating and recording on its system of interior panels over fiscal reporting, and required auditors to annually report on the effectiveness of that system of internal controls. The effort can be compared to its parallel act formulated by the Congress in 1929 that was one of the major factors that led to the Great Depression. Some economists hint at the possible repetition of future in this regard.(Harvard Business Review, 2006)

Once the accounting board is set into action, it will control, supervise, scrutinize and discipline all accounting firms that appraise public companies. This effort will not only promote better financial transparency in the accounting field, but also uplifts the public confidence in the regime. One of the major factors to consider in this regard is the stakeholders involved. They are the financial corporates, of small and large-scale businesses. It increased the civil and criminal penalties faced by accounting institutions and also provided protection to whistleblowers of possible frauds in the companies. This law not only strengthened the control environment of the companies’ accounting departments, it also led to better documentation by the auditors, and increased the audit committee involvement in firms.(Larry Bumgardner, 2016)

This is a good law, which aims to improve transparency of the finance field, and helps the stakeholders involved. But it also imposes severe punishments in case of non-obedience which may hinder the financial chain in different firms.(Anon, 2016)