SOX: Sarbanes-Oxley Act of 2002

Introduction

This was a landmark Act that came to pass in 2002. The aim of Sarbanes-Oxley Act of 2002 was overhaul of legislation that deals with financial legislations. This was a reaction in policy by the government and the high incidence if high profile cases that involved accounting fraud; this was mainly spearheaded by those in the telecommunications industry and the that of energy giant Enron. Due to this a lot of major changes were brought in especially in try regulate the financial practice and corporate governance as a whole. The Act was eventually named after the architects behind it being Senator Paul Sarbanes and Representative Michael Oxley. There were sections that were subdivided that would be used n ensuring that compliance took place. Among them there are those that are more pertinent than others hence will require more effort (www.soxlaw.com, 2006).

According to Baral (2006), the main purpose of the Act was to protect the investors from certain situations by improving accuracy and reliability existing in corporate by disclosure that is availed. The Act thus changes the approaches used in corporate accountability and in the process instils new penalties for any acts of wrongdoing. This ensures that all the corporate board and executives have to interact with others and auditors. In doing this it removes the tag of the person claiming not being around or aware of certain events in the organization. This means that all financial reports need to have an internal control report. In the long run it gives the satisfaction that all financial data given by the company is accurate but also accurate. In addition the company needs to adequate internal controls to be sued in safeguarding data and this will be done after the after every end-year financial reports.

Sections of Sarbanes-Oxley Act

Section 302

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