Strengthening Corporate Accountability and Responsibility with Sarbanes-Oxley Act and COSO

Enron, Arthur Andersen, WorldCom. What does these companies and others have in common? They involved audit and corporate governance failures, resulting in the erosion of public confidence. Because of these high-profile corporate and accounting scandals, Congress passed the Public Company Accounting Reform and Investor Protection Act, commonly known as the Sarbanes Oxley Act of 2002 (SOX). SOX mandated reforms to improve financial disclosures from corporations and to prevent accounting fraud.
I. SOX
SOX applies to all public companies in the United States and international companies that have registered equity or debt securities under the Securities Exchange Act of 1934. It is also applicable to accounting firms that provide auditing services to these companies subject to the Act. Its purpose is to enhance corporate accountability and responsibility.
The Eleven Titles There are eleven titles in SOX. Title I addresses public company accounting oversight board. Title II addresses an auditor’s independence. Title III addresses corporate responsibility. Title IV address enhanced financial disclosures. Title V addresses analyst conflicts of interest. Title VI addresses commission resources and authority. Title VII addresses studies and reports regarding consolidation, credit rating, violations, enforcement and investment banks. Title VIII addresses corporate and

criminal fraud accountability. Title IX addresses white-collar crime penalty. Title X addresses corporate tax returns. Title XI addresses corporate fraud and accountability. These Titles include many provisions; however, some important provisions come from Title I, Title III and Title IV.
Section 101 Section 101 established the Public Company Accounting Oversight Board (PCAOB) to oversee