Running head: SOX-2002

Sarbanes-Oxley Act-2002
Lisa Draxler
ACC/561
September 22, 2015
Cathleen Davis

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Sarbanes-Oxley Act-2002

This paper, Sarbanes-Oxley Act of 2002, will define the primary facets of the regulatory
environment which safeguard the public from fraud within corporations. This paper will put
focus upon the SOX requirements, with assessing whether SOX is actually effective in avoiding
fraud in the future.
Regulatory environment entails several laws and regulations that has been established by
federal, state, and local governments in order to limit control over business practices. The
regulatory environment plays a vital role in the constructive operation of the financial sector and
in the well-organized management and incorporation of capital flow and domestic savings.
Regulatory acquiescence has always been a part of doing business. In almost all industries there
are various governments and industry guidelines that they company must follow in the way that
they conduct their business and the penalties of not following the regulations are clearly defined
within the company (Doculabs White Papers, 2012).
There are various guidelines that has been around for a long time that were established to
help guard 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 U.S. Securities and
Exchange Commission is developed to help shield investors, preserve fair, orderly, and effective
markets, and simplify capital information. Some people are actually turning to the markets to
help secure their futures, pay for homes, and send their children to college; so it is now more
vital for the Securities and Exchange Commission to protect the investor. The nations securities
exchange has went global for profit competitors, so there is greater need for sound market
regulations.

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The SEC is primarily worried with encouraging the disclosure of vital market related data
and upholding fait dealing; defending against fraud. Every year the SEC brings hundreds of civil
enforcement actions against individuals and companies for violations of the securities law. Some
of the key breaches are: trading, accounting fraud, and providing false or misleading information
about the securities and the companies that issue them. The SEC is one of the chief sources that
helps safeguard the general public form fraud within a corporation. However, the Sarbanes
Oxley Act will play a significant role with the SEC to help protect the public form fraud within
corporation.
On July 30, 2002, the Sarbanes Oxley Act was created to help protect the public from
fraud within corporation. However, it was created because optimistic solutions were needed after
the issues from fraudulent accounting practice. Good examples would be: the Enron, Tyco, and
WorldCom scandals and the questions regarding governance in American Corporations that
happened in reply to these events. The Sarbanes-Oxley Act is also known as the Public Company
Accounting Reform and Investor Protection Act of 2002. This act was established to improve
transparency and the due assiduousness process while setting new standards for public company
boards, accounting firms, senior management and executives.
Congress passed the Sarbanes-Oxley Act to help decrease the unethical corporate conduct
and reduce the likelihood of future scandals. Now top management of corporations must verify
the accurateness of financial information. The penalties for fraudulent financial activities are now
more severe than they once were before the SOX act was developed. One of the SOX
requirements is that the public companies introduce processes for keeping track of all the
financial data from the moment of beginning to the time it is submitted in an annual report to the
SEC. (Doculabs White Papers, 2012) The Sarbanes-Oxley Act of 2002 has increased the

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independence of the outside auditors who review the accurateness of corporate financial
statement and increases the oversight role of boards of directors (Doculabs White Papers, 2012).
In conclusion, The Sarbanes Oxley Act of 2002 has played a significant role in helping
to expand the protection of the public from fraud within the corporation. Still, fraud is a problem
that cannot be resolved by legislation. The supplementary cost from the SOX is costing
companies more money and in some cases there are no practical benefits associated to fraud
prevention and discovery. The bottom line is SOX may make a modification in fraud within the
corporation in the future, if companies are willing to pay the extra cost and are willing to follow
all the regulations that they have set.

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References

Doculabs White Papers. (2012). Sarbanes - Oxley Challenges and Opportunity in the New
Regulatory Environment. Retrieved from http://www.bankersononline.com
Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2009). Accounting: Tools for business decision
making (3rd ed.). Hoboken, NJ: John Wiley & Son
The Investors Advcate. (2013). U.S. Securities and Exchange Commission. Retrieved from
http://www.sec.gov