...University of Phoenix Material Article Review Format Guide MEMORANDUM UNIVERSITY OF PHOENIX DATE: November 2, 2015 TO: Jason Johannes FROM: Jasma Phillips RE: The Cost and Benefits of Sarbanes-Oxley/ Forbes ARTICLE SYNOPSIS Sarbanes Oxley Act is “an act passed by U.S. Congress in 2002 to protect investors from the possibility of fraudulent accounting activities by corporations” (“Sarbanes Oxley Act,” 2015). In the review of “The Cost and Benefits of Sarbanes Oxley”, the article started out speaking on how the SOX Act 2002 was designed to protect investors, but many felt as if it was politically motivated. This Act will cause to lose risk takers and competiveness. In today’s business environment, the Sarbanes Oxley Act molded the ethical standpoint to numerous companies. The SOX Act 2002 was designed to keep companies honest. The criminal penalty for this law is a fine and/ or 25 years, but no more than 25 years. The stiff punishment minimized the fraudulent ideas from individuals and firms. The SOX Act 2002 increased the consumer confidence. “We only know that there were benefits in terms of financial reporting and corporate governance; that costs of implementation were higher for smaller companies; and that concerns about risk-taking and investment haven’t come to bear” (“The Cost and Benefit of Sarbanes and Oxley,” 2014, p. 1). This article also goes and talk about the cost and benefits of the Sarbanes Oxley Act 2002. SOX restrictions...
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...Five Article Review University of Phoenix Contemporary Business Law LAW/421 Valentine Castillo April 29, 2013 University of Phoenix Material Article Review Format Guide MEMORANDUM UNIVERSITY OF PHOENIX DATE: April 29, 2013 TO: Valentine Castillo FROM: RE: Sarbanes-Oxley Act: Was the ‘one-size-fits-all’ approach justified? Nogler, G., & Inwon, J. (2011, May/June). Sarbanes-Oxley Act: Was the ’one-size-fits-all’ approach justified? Journal of Corporate Accounting & Finance (Wiley), 22(4), 65-76. http://dx.doi.org/10.1002/jcaf.20691 ARTICLE SYNOPSIS The article discusses whether the Sarbanes-Oxley Act and the subsequence laws were the correct solution for the problems that arose from the Enron and WorldCom bankruptcies. The article illustrates how the different rules and legislature affect different size business, and the ramifications that resulted for companies that must follow the Sarbanes-Oxley Act. The authors of the article also conducted a study on whether or not fraud of the financial statements was in direct correlation of businesses filing bankruptcy (Nogler & Inwon, 2011, p. 68) like in the cases of Enron and WorldCom. The results found that the larger the company that filed bankruptcy the more likely that securities fraud litigation and general overstatement of the revenue and assets of the company occurred (Nogler & Inwon, 2011). LEGAL ISSUE Legal issues were rampant in the article. For...
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...Sarbanes-Oxley Act Article LAW/421 Sarbanes-Oxley Act Article The article chosen is the Sarbanes-Oxley Act of 2002 and the legacy of Enron. This act was passed after corporate scandals that involved the regulatory mismanagement and fraud of Enron. This article review will cover topics on how the Sarbanes-Oxley and the collapse of Enron in which affected the ethical decision-making processes in business environments and criminal penalties for which the act provides. Decision-Making in Business Environment “A new generation of corporate leaders has entered the boardroom since Enron’s bankruptcy in December 2001” (Peregrine, 2011, Para. 2). The Act of Sarbanes-Oxley was passed to restore the integrity and to renew consumer confidence in the financial markets. The Sarbanes-Oxley regulates three areas: financial reporting, auditing, and corporate governance. The Sarbanes-Oxley requires businesses and corporations to develop and implement a code of ethics, collaboration, and confidentiality. The significance of this law is to viewed context that affect corporate governance and the exercise duties of officers and directors. Decision-making provides standards and guidelines to those employees of all levels. “This new law impacted accounting and financial decision making because it required companies to be responsible for their financial decisions; it also regulated the way board members and auditors interact, as well as, recognizing and regulating the problem of auditors working...
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...Sarbanes Oxley Act Article Review Amber Means LAW 421 November 24, 2014 Jane Schneider Sarbanes Oxley Act Article Review Corporate fraud and mismanagement scandals in publically held companies, along with the public outcry for stricter regulations and accountability in early 2000 led to the passing of the Sarbanes-Oxley Act (SOX Act) of 2002. The primary purpose of the SOX Act is to overhaul the structure of corporate governance regulatory structure and impose stricter regulation and controls on the auditing, financial reporting and internal corporate governance procedures of corporations (Melvin, 2011). Significant portions of the Act are aimed towards creating solutions for specific failures in the auditing and accounting procedures of publically held companies. The Act also increased the jurisdiction, enforcement alternatives and enforcement budget of the U.S. Securities and Exchange Commission (SEC) substantially (Melvin, 2011). The SOX Act of 2002 was implemented to effectively end corruption within publically held companies and restore the faith of investors in the corporate system, but how well is it working? The following is summary of the article “Sarbanes-Oxley Act 2002 (SOX) – 10 years later” which discusses the intentions of the SOX Act, the corruption and legislative environment which led to its implementation, and how its implementation has affected corporations and investors. History of legislation Prior to the Sarbanes-Oxley Act 2002, the Securities...
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...Effects of Unethical Behavior Article Analysis Effects of Unethical Behavior Article Analysis Sarbanes Oxley Act was established in 2002, mandating organizations large or small to follow. “The Sarbanes Oxley Act has introduced major changes to the regulation of financial practice and corporate governance” (Sarbanes-Oxley Essential Information, 2012). The act has also changed the way financial statements have to be reported. In a Post Sarbanes Oxley Era companies need to adapt to become more relational to stay successful. The Sarbanes Oxley Act has changed the reporting of financial statements by making organizations include an internal control report. The reason for this report is for the purpose of “showing that not only the company’s financial data is accurate, but that the company has confidence in them because adequate controls are in place to safeguard financial data” (Sarbanes-Oxley Essential Information, 2012). Also at the year-end financial reports need to have an assessment of how effective the internal controls are in which the issuer’s auditing firm attest to the assessment. This happens after the auditing firm reviews the “controls, policies, and procedures during a Section 40/40 audit, which is conducted with a traditional financial audit” (Sarbanes-Oxley Essential Information, 2012). For firms to become more relational in a Post Sarbanes Oxley Era, they need to redefine the roles of each audit professional and retrain their employees to incorporate...
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...Article Review: Sarbanes-Oxley Act of 2002 It is unfortunate that many increasing standards come after a failure in the system. The Sarbanes-Oxley Act of 2002 is a primary example. The public scandals of Enron, Tyco and WorldCom were quickly followed with this act. It brought great change throughout the world of business. The Act was enacted in July of 2002 and co-authored by U.S. Sen. Paul Sarbanes of Maryland and U.S. Rep. Michael Oxley of Ohio. The Sarbanes-Oxley Act gave more confidence in investors and creditors when it comes to fraud by reforming reporting standards. Although the market took a huge hit after the collapse of several major companies between 200-2004, the Sarbanes-Oxley began to rebuild the market and the ethical standards within it. The Sarbanes-Oxley brought about many other aspects besides the act itself. In turn, the Public Company Accounting Oversight Board was created, assessment of liability with auditors was enacted, new internal control procedures, and more liability for all involved. The oversight Board is responsible for monitoring public accounting companies and performs regular audits. Sarbanes-Oxley intended for two main things with the market; to boost the confidence of investors in a previously broken market, and to decrease fraud. Along with positives, the Sarbanes-Oxley Act brought on some negative aspects as well. Some public companies required to comply with Sarbanes-Oxley are subject to additional costs directly assigned...
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...Article Review: Sarbanes-Oxley Act of 2002 Melissa Adams LAW/421 October 16, 2014 Mrs. Lydia Quarles Article Review: Sarbanes-Oxley Act of 2002 The Sarbanes-Oxley Act (SOX Act) of 2002, passed by the United States Congress with the intention of protecting investors from fraudulent activities experienced by business entities or corporations. The enactment of the SOX Act happened at a time when various scandals such as Tyco, Enron, and WorldCom affected the confidence of investors. Indeed, the SOX Act is about regulatory measures that are essential for purposes of protecting the welfare of investors. It is important to note that the business environment in today’s world require the investors to make proper decisions so as to survive in the current competitive global market. The process of making decisions governed by various ethical attributes key among them being integrity, transparency, and accountability. Ethical Decision The SOX Act has the effect of ensuring that investors’ confidence improves through the existence of regulatory provisions that are effective in enhancing ethical standards. “The Supreme Court must determine if the Sarbanes-Oxley Act of 2002 violates the Constitution’s separation of powers framework by assigning too much power to the Public Company Accounting Oversight Board without providing any residual control power to the President to supervise the Board” (Balasanian & Chu...
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...Article Review Sarbanes-Oxley Act (SOX Act) of 2002 - 421/LAW October 21, 2015 How Does the Sarbanes-Oxley Act of 2002 Affect Small Business Owners? (Chron, 2015) Article Synopsis Senator Paul Sarbanes and Representative Michael Oxley proposed the Act to toughen corporate liability, prevent scandalous fraud, and to protect company investors. Companies would go broke soon after showing and reporting that their financial reports were sound and company is in good standings. An example would be Enron. Knowingly gave incorrect financial numbers on their transactions information to the government auditors to hide huge losses. Congress passed the Sarbanes-Oxley Act following corporate scandals to make companies accountable for their financial records (Chron, 2015). The Sarbanes-Oxley Act would magnify management's judgement about full disclosure and ethical practices by making them more aware of the possible outcomes should they be less than honest or fail to maintain compliance. The Sarbanes-Oxley Act holds executive and financial officers of a company answerable for the financial information they provide. When there is a change in the finances of a company, they must report the changes right away. They are not to wait until the next financial report. Companies large and small are required to report specific fiscal information, and procedures to ensure all financial records are legal. All public companies, large and small have to follow Sarbanes-Oxley Act. While large...
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...Article Review Jennifer Abruscati LAW/421 June 2, 2014 Stacey Mealey Article Review The “High Court Ruling Only Tweaks Sarbanes-Oxley Act” article refers to the Supreme Court ruling in the case Free Enterprise Fund v. PCAOB. The United States Supreme Court upheld the constitutionality of all of the Sarbanes-Oxley Act and it will remain “fully operative as law”, except for one provision that allows the Securities Exchange Committee (SEC) to remove PCAOB members on good cause only. The Supreme Court decided that this provision did not agree with the United States Constitution’s premise of separation of powers, giving authority to the president, not the SEC, to appoint or fire PCAOB members. The Sarbanes-Oxley Act was passed through the U.S. Congress in 2002 after various corporate accounting scandals, such as Enron. Financial statements were falsified to make the corporation look more appealing to investors and for those who invested and believed Enron’s financial position to be true, lost everything. How would investors know if they are making a good investment? Investors were scared to invest in corporations because financial statements were not regulated. The SOX Act was created to protect investors from corporations that use fraudulent accounting activities by enforcing policies and regulations for reporting financial statements and holding companies accountable that used fraudulent methods. Today, the SOX Act is an integral part of all corporations financial...
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...University of Phoenix Material Article Review Format Guide MEMORANDUM UNIVERSITY OF PHOENIX DATE: TO: FROM: RE: Bumgardener, L. (n.d.). Retrieved from http://gbr.pepperdine.edu/2010/08/reforming-corporate-america/ ARTICLE SYNOPSIS This article discusses the Sarbanes-Oxley Act and how it was formed. Sarbanes-Oxley Act is named after U.S. Senator Paul Sarbanes (D-MD) and U.S. Representative Michael G. Oxley (R-OH) who sponsored it. Under the guidelines of Sarbanes-Oxley Act, top management must now individually certify the accuracy of financial information. The need of this act came about after the markets crash in 1929. Congress began looking into corporate fraud in the 1930’s and began the Securities Act of 1933. This law was viewed insufficient; in just one year congress passed the Securities Exchange Act of 1934. This was viewed to be good enough until corporations began to get caught in fraud again like, Enron in 2001. So, in 2002 the Sarbanes-Oxley Act was passed to help get a handle on new corporate fraud. LEGAL ISSUE The article pointed out how a business practice of the late 90’s and early 00’s lead to stricter federal regulations and auditing. Enron for one was borrowing money to cover loss and hiding funds in offshore accounts; this was all too raised their stock value. Sarbanes-Oxley Act is the response to this type of businesses and helps the government to keep a handle on it. MANAGERIAL PERSPECTIVE Discuss how the legal issues affect...
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...Material Article Review Format Guide MEMORANDUM UNIVERSITY OF PHOENIX DATE: March 21, 2015 TO: Ric Blackwell FROM: Shantele Norwood RE: The Sarbanes-Oxley Act: Possible impacts on privately held companies by Justin G. Klimko The Sarbanes- Oxley Act: Possible impacts on privately held companies Most provisions of the Sarbanes- Oxley Act apply only to publicly held reporting companies. Privately held companies doing business with public companies subjected to the act may have certain Sarbanes- based provisions imposed as a matter of contract. Privately held clients should expect that some of these concepts will filter into professional responsibility rules. Certain provisions of Sarbanes – Oxley are directly applicable to privately held companies. Privately held companies doing business with public companies subject to the act may have certain Sarbanes- based provisions imposed as a matter of contract. Attorneys and their privately held clients should expect that some of these concepts will filter into professional responsibility rules. The Sarbanes- Oxley Act has created a positive impact on the ethical culture of large corporations. Changes in corporate governance have made it much more difficult for executives to make decisions that could cause corporate collapse. A full board of directors creates a system that can fully comply with federal financial reporting laws. Even though the privately held companies may be held to have certain Sarbanes- based...
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...Sarbanes- Oxley Article Review Rafael Perez LAW/421 November 7, 2012 David Cory University of Phoenix Material Article Review Format Guide MEMORANDUM UNIVERSITY OF PHOENIX DATE: November 7, 2012 TO: David Cory FROM: Rafael Perez RE: Still Debating the Merits of Sarbanes-Oxley, 10 Years Later (Dunn, 2012) ARTICLE SYNOPSIS Sparking the 10-year anniversary of the passing of the Sarbanes-Oxley Act of 2002 comes some controversy regarding whether the law has proved to be useful, or more of a headache for companies in the United States. Following the huge accounting scandal at the Enron Corporation, the Sarbanes-Oxley Act was passed to change the compliance behind how companies would report their financials. Being enforced by the Securities and Exchange Commission (SEC), the SOX helps monitor corporate governance, reporting of financial statements, and accounting controls. Recently some more discussions arose concerning SOX at a new corporate social responsibility event called COMMIT!Forum. Questions surrounding if mandated corporate disclosure has done more good than bad was on the for front. At the conference, Sen. Sarbanes referenced the ENRON scandal and how the market fell by trillions of dollars, including job cuts,...
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...Sarbanes-Oxley Gabriel Mould ACC561 October 13, 2015 Dr. Janet Forney Sarbanes-Oxley Aspects of the Regulatory Environment In 2001, one of the largest corporate scandals unraveled as Enron/Andersen was accused of corporate fraud. Not long after were companies such as ImClone and Global Crossing were deemed under the same fraudulent activities and congress did very little in correcting the situations. (Larry Bumgardner, 2003) Several committees did hold hearings and a number of bills were introduced to address corporate misconduct. However, the differences between the Senate under Democratic control at the time, and the House of Representatives and White House, under Republican control, on how to address the problems were so great that no legislation appeared imminent. (Larry Bumgardner, 2003) There was a second wave of scandals that involved WorldCom and Adelphia in the summer of 2002. (Larry Bumgardner, 2003) WorldCom had $107 billion in assets but after filing in the Southern District of New York was crushed by their debt of $41 billion. WorldCom’s bankruptcy is the largest in United States history making Enron seem irrelevant. (Beltran, 2002) Three founding members and two other company executives of Adelphia were arrested on charges of looting the nation’s sixth-largest cable-television company on a massive scale. Congress along with the White House began to notice a steady decrease in the stock market which led them to call for action against these scandals...
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...University of Phoenix Material Article Review Format Guide MEMORANDUM UNIVERSITY OF PHOENIX DATE: November 25, 2013 TO: XXX FROM: XXX RE: Impact of Sarbanes-Oxley Act upon management: a behavioral discussion. (Linsley, C., & Linsley, C., 2008) ARTICLE SYNOPSIS The authors of this article had a desire to examine the behavioral psychological affects on senior management staff members after the introduction of the Sarbanes-Oxley Act of 2002. The behavior changes could affect future legislation that regulates the financial community and how it is perceived and applied. Linsey, C. and Linsey, C. (2008), suggest that it would be useful to further understand how legislation affects people in order to predict behavior changes affected by future legislation and regulation. Linsey, C. and Linsey C. (2008), conducted a very thorough investigation into the SOA effects on senior management, using the work of psychologists Tversky and Kahneman, (Linsey, C. and Linsey, C., 2008) to arrive at their conclusion that behavior of senior management was indeed affection by the Sarbanes-Oxley Act. They saw that the Act could have could be seen in a negative light by management due to assumption and bias in their established thinking. One thing that I particularly interesting about the article, is that the authors noted what they considered to be the managerial reaction to the SOA. They believed that the new regulations would magnify managements discernment...
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...University of Phoenix Material Article Review Format Guide MEMORANDUM UNIVERSITY OF PHOENIX DATE: 8/26/2014 TO: Jon Croasmun FROM: RE: Sarbanes-Oxley Act: Was the “one-size-fits-all” approach justified? http://dx.doi.org/10.1002/jcaf.20691 ARTICLE SYNOPSIS In your own words, summarize the article. This article talks about whether or not the Sarbanes-Oxley Act and the laws that came along with it were the right solutions for the issues that came out of the WorldCom and Enron bankruptcies. It discusses how different sized businesses are affected by different rules and legislature and the outcomes that arose in which different companies would have to follow because of the SOX act. The author of this article did studies on if fraud of the financial statements had anything do with businesses filing for bankruptcy, this being the case with WorldCom and Enron. The author concluded that the bigger the company that filed, it was more likely general overstatement and fraud litigation occurred. LEGAL ISSUE In 1 to 3 sentences, identify the legal business issues raised in the article. Legal issues were everywhere in this article. One example with the Sarbanes-Oxley Act of 2002 going into place, Companies could choose to no longer be publically traded just so that they didn’t have to follow the SOX act. This article also explains whether or not it is right to make smaller companies adhere to the same rules and regulations as the larger companies...
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