The needs and implications of the Sarbanes-Oxley Act of 2002

The needs and implications of the SARBANES-OXLEY ACT OF 2002 GENERAL BACKGROUND The Enrons and Worldcoms made it top that the fiscal markets cannot be left under the tutelage of structured directors and officers, without oversight authority. The corporate abuses and fraud that Enron exemplified, while not a introductory in the fiscal markets, they were certainly a first in impairment of the magnitude of the losses to stockholders and the confidence the normal reposed in the financial sector (Bequai 2003). The allegation against Enron was that it used finicky purpose vehicles for $8.5 one million million million of deals to blot out real level of debt (Student Accountant 2002, p.9). WorldCom was alleged to shake enured over £3.8 jillion revenue costs - internet care - as capital expenditure to inflate gelt. Also, Loans of $2.5 billion were misreported (Student Accountant 2002, p.9). Both companies came under criminal investigation, went bankrupt - WorldCom existence the biggest ever bankruptcy - and the auditor for both companies (Anderson) was convicted for obstruction of justice. The Sarbanes Oxley subprogram of 2002 was instigated as a direct result of the Enron, WorldCom and other accounting scandals in the US. It does not affect UK companies unless they are subsidiaries of US firms or are listed on US stock exchanges.

The act combines bills earlier drafted by US senator Paul Sarbanes and Congressman Michael Oxley. It is de sign to go through corporate accountability through new requirements, backed by stiff penalties. Under the Act, Chief Execut ive Officers (CEOs) and Chief financial Off! icers (CFOs) must personally certify the accuracy of financial statements, with a maximum penalty of 20 years in post back and a $5m fine for false statements (It Week 2003) president George W. Bush signed the Act on 30 July 2002 (the passing Date). This landmark rule and the resulting regulations, will... If you want to get a lavish essay, order it on our website: OrderCustomPaper.com

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