...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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...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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...Sarbanes Oxley Act LAW/421 Sloan Hood January 31, 2014 Cornelius Perry In the United States, there are many businesses that are going through tough times in this economy, and some of the “little” or smaller ones are slowly having to close their doors for business over changes to certain laws over the recent decade. They are having to deal with big fines and account for audits on the very businesses they own and manage. One of the biggest new things or changes is that every business has to go through an internal and external audit each year. This change is the Sarbanes Oxley Act of 2002. And, the audits themselves can be and are rather expensive. The businesses have to hire pros from within for one audit and another from outside for the external audit. This is not very cost effective for most small businesses. In recent times, many energy companies have been experiencing vast amounts of success, in the nineties and early part of the new millennium, They were showing extremely high profits and flourishing greatly. Companies like Tyco, Worldcom, Enron and others were using unethical practices , which not only cost their investors money, but also this made the general public have no faith in the securities markets. It, the trust, was very non-existent, and understandably so. These companies had executives attempting to hide funds and bad practices from the boards and directors that were there and in place to govern their business practices in order to keep the business running...
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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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...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 instance, with the issuance of the Sarbanes-Oxley Act of 2002...
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...Article Review: Sarbanes – Oxley Act LAW/421 August 20, 2012 Jane Schneider Sarbanes – Oxley Act of 2002 Modern businesses have their full share of ethical dilemmas. With law and ethics, business environments can be equipped with tools to successfully handle ethical situations. Without legal and ethical discipline, a business can deteriorate in the blink of an eye. Because of the Sarbanes-Oxley Act, businesses can be controlled on the way they conduct business through the instruction of auditing, corporate governance, and financial reporting. The Sarbanes-Oxley Act came about due to the issues with Enron. Enron was an organization founded based on two companies: InterNorth and Houston Natural Gas. Enron grew rapidly in the United States and maintained strong globally. Even through Enron progressed, the executives became greedy. Days before Enron announced a $618 million loss over the third quarter, the company’s accountants told workers to destroy all audit material and keep the basic work documents. Because of this, workers suing Enron for lost retirement savings were denied all of the backup paperwork to support their claims against Enron. Enron’s accounting firm reminded employees of the document destruction process prior to the subpoenas issued by the Security and Exchange Commission. There is speculation that documents were being destroyed even after the subpoenas were issued. Accounting firms are to use a retention policy, and any intentional destruction...
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...Garrett LAW/421 1/12/2014 Instructor: JANE SCHNEIDER The Securities and Exchange Commission was created to hold companies accountable for reporting their current state of financial information on a statement to give the market and investors a snap shot of the company health. This basic legislation of 1933-1934 Securities Act was very basic when you fast forward six or several decades later since that Act there were legislation drafted twice one in 70’s and in the other in the early 90’s. They were introduce to improve on the Securities Acts of ’33 and ‘34 to curt tail newly created unethical practices the rear their head over the course of time but with no new legislative to combat it when it occurred there was no way to control them either. These drafts of new financial regulations were created to add on to the previous Acts to control these new and various forms fraud, falsifying and manipulations by corporations. The draft act of ‘70 did not see the day of light but the one draft in the ‘90s almost made it but was pulled at the last minute and boy that was the one that could have changed what would later change the course of financial history. Unfortunately these legislatives never passed mainly due to the climate in the mid-nineties when making money was so easy from loading up corporations, dotcoms and startups, no one from CEO’s to most politicians did not want more financial regulations. In the late 90’ going into ’00, or before the Sarbanes-Oxley Act of 2002, The Sweeney (2012)...
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...Sarbanes-Oxley Act of 2002 Analysis Lisa Dupree LAW 421 November 30, 2014 Miriam Gold Sarbanes-Oxley Act of 2002 Analysis The Sarbanes-Oxley Act was signed on the 30th day of July in year 2002 by President George W. Bush after passing through the Senate with a unanimous vote and passing through the House of Representatives with a 423-3 vote. When the Sarbanes-Oxley Act of 2002 was enacted it directly affected CPAs, CPA firms that review public organizations, publicly traded organizations, their employees, their officers, their owners, those who have “more than 10 percent of the outstanding common shares” in a publicly traded company, lawyers who work for publicly traded companies, lawyers who have publicly traded organizations as clients, traders, merchants, financial specialist, and investors who work for publicly traded companies (NYSSCPA, 2014). The SOX act created a five affiliate oversight panel that is “subject to the Securities and Exchange Commission (SEC) oversight” (NYSSCPA, 2014). The Public Company Accounting Oversight Board (PCAOB) was created to investigate, inspect, discipline public accountant firms and also enforce compliance with the SOX act. Registration with the (PCAOB) is mandatory for all CPA firms. Lisa- The Enactment of the SOX Act Kris- SOX and Ethical Decision Making The SOX Act was created by Congress to protect investors and companies from irresponsible accounting practices. The purpose of the SOX Act is to ensure...
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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 Act (SOX) The accounting industry as a whole endured quite a lot of publicity in last few years. Accounting scandals at mega-corporations likes Tyco, Enron, and WorldCom had made the public painfully aware of the limitations of internal accounting practices and the apparent ease with which corporate executives can manipulate the industry and report false financial information. In light of that limitation, the United States government passed the Sarbanes-Oxley Act (SOX) in 2002, which was primarily intended to restore the public's trust in public accounting. The act was approved by the House by a vote of 421 in favor, 3 opposed, and 8 abstaining and by the Senate with a vote of 99 in favor, 1 abstaining. President George W. Bush signed it into law, stating it included "the most far-reaching reforms of American business practices since the time of Franklin D. Roosevelt." The Sarbanes-Oxley act provides stiff punishments for those at the helm of companies and fines of over $5 million for violation of the laws. The act is named after senator Sarbanes and Oxley who are the architects of the act. Sarbanes-Oxley Act was meant to introduce regulation to corporate governance and financial accounting. The act brought in mandatory rules regarding the internal financial controls. The Sarbanes Oxley act was assented to by the President on 30th July 2002 and principally applies to the issues as stated in the securities act, that is public issues and companies with...
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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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...Sarbanes-Oxley Act (SOX-Act) of 2002 Article LAW 421 May 02, 2013 Mr. Mark Reed Sarbanes-Oxley Act (SOX-Act) of 2002 Article In this report, we will discuss about a couple of healthcare whistleblowers, who had to endure harassment and unjust treatment after disclosing some wrong doings in their place of employment. We will also discuss how this act protects whistleblowers and the penalties involved for those who are found in violation of the Sarbanes-Oxley Act. ARTICLE SYNOPSIS This particular case started with two brave Texan nurses where they had blown the whistle on one of their doctors, Dr. Rolando G. Arafiles Jr., formerly from the Winkler County Memorial Hospital in Kermit, Texas, who had misused information and had retaliated against the two nurses that eventually ended their career as nurses. The nurses had witnessed unsafe and dangerous practices at their hospital and sent an anonymous letter to the state medical board. Dr. Arafiles, in response, vise making an effort to fix the problem, an array of people from the doctor, the hospital administrator, the county sheriff including the county prosecutor bonded together to discredit and harass the nurses. Despite of all these retaliation that they were continually getting from these people, the two nurses, Anne Mitchell and Vicki Galle stood firm and strong (Danaher, 2011). After two hard years of court proceedings, in January of 2010, Dr. Arafiles, along with his cohorts, were found guilty of retaliation...
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...Accounting Fraud at Cit Computer Leasing Group Inc Article Reveiw Kiarra Banks Law/421 September 18, 2013 Professor Hughes In week four of class, we read about the Sarbanes-Oxley Act of 2002. According to Margaret Rouse, this act was passed as a response to scandals such as Enron and Worldcom, the nation’s renowned financial scandals, to protect the shareholders and the general public from accounting errors and fraudulent practices in the enterprise (Rouse, M. 2007). If not known, Enron was known for “cooking the books”. They had planned an accounting fraud that cost millions of dollars. In this article, it was similar situation but smaller and see how the SOX act takes effect in today’s business’. This article starts off with Haley Werle a manager, reminiscing back a couple weeks ago from when all the fraud was caught. CIT, a local company located in Jacksonville, Florida, a fortune 500 company, had at least $637,000 stolen from them in false inventory due to one employee, Kaveh Naikan. He was a supervisor at CIT for many years, but was fired reselling company computers to non-approved resellers and pocketing what he received. The red flag was when Werle recognized that some computers were sold to a non-approved warehouse. Once she remembered that the warehouse that wasn’t approved, was one of Naikan closest friends, now has gained access to CITS assets. At the end, he was sentenced three years wih owing CIT group $300,000. He did not have to owe it all back because...
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...SOX Act of 2002 Joseph Holmes LAW/421 May 11, 2015 Gregory Henderson University of Phoenix Material Article Review Format Guide MEMORANDUM UNIVERSITY OF PHOENIX DATE: May 11, 2015 TO: Gregory Henderson FROM: Joseph Holmes RE: Year-old Law's Not Enough To Quell Some Investors' Distrust; By Rafael Gerena-Morales and Purva Patel Business WriterS July 30, 2003 ARTICLE SYNOPSIS Looking into many of the surveyor’s opinion they all feel that even with the new Sarbanes-Oxley Act they still cannot trust the market. They still feel that there are loop holes that companies have to still cheat the system. For reluctant investors, Sarbanes-Oxley aims to help them believe the force of law will fortify accounting standards and reduce the opportunities for executives to falsify financial reports that sway stock prices. Even though that this Act has only been working for a year it will take time in order for it work. It has not established any credibility because there has not been any law suits that have gone through any courts yet. Of course there is going to be a distrust between investors and the new established Act. LEGAL ISSUE The legal issue is that the Act has yet been able to get any credibility because it was barely established. “Charles Harper, who ran the Security and Exchange Commission's Miami office for 14 years until 1994, said investors will have to be patient because white-collar crimes can take months if not years to investigate...
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