documents hold the trust of those who rely on accurate financial information. Once the trust is broken, it can take time to rebuild. Unfortunately, the publics’ trust in the accounting profession was shaken with several large scandals such as Enron and WorldCom, and they are still working toward repairing the damage. Investors lost faith and hesitated to invest money, which can hurt the economy. In answer to this developing crisis of faith, President Bush signed the Sarbanes-Oxley Act of 2002 (SOX)
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Note This paper was prepared for AMBA630 Economics Management Decisions, Section 9045, taught by Professor Victor Bahhouth. Executive Summary In order to avoid fraudulent reporting, the Securities Exchange Commission (SEC) has mandated that auditing for organizations must be completed by independent accountants. Today scrutiny of the accounting industry is more intense as laws are created to punish those that choose to falsify information. This paper aims to explain the importance of the Sarbanes-Oxley
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and Investor Protection Act” and “and 'Corporate and Auditing Accountability and Responsibility Act”. The main objective of the act is to protect investors by improving the accuracy and reliability of corporate disclosures. New aspects are created by SOX act for corporate accountability as well as new penalties for wrong doings. It was basically introduced after major corporate and accounting scandals including the scandals of Enron, WorldCom etc so that the same kind of scandals do not repeat again
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Nicholls was printed in the CPA journal in April of this year. To give a brief history of SOX after the corporate fraud in the early 2000’s the SEC felt pressure to respond. Their response to the fraud committed my giant corporations such as Enron and WorldCom was the Sarbanes-Oxley Act. The main point of SOX was to try to limit or ideally eliminate corporate fraud by cracking down on self-regulating audit. The answer as to whether SOX is working or not is not as simple as yes or no. Some say that the
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Regulatory and Compliance Issues Introduction Reviewing the growth of the Sarbanes-Oxley Act (SOX) which was made based on the public business outrages. The WorldCom and The Enron issues, for instance, gave shareholders self-confidence in entities traded on the open markets throughout ’01 and ’02. Congress was very fast to answer to the political disaster and made the bill of the Sarbanes-Oxley Act of 2002, which eventually the bill was signed into edict by President Bush on July 30 to give self-assurance
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Towards Reducing the Audit Expectation Gap: Possible Mission? The auditing profession believes that the increase in litigation and criticism against auditors may be due to the audit expectation gap. The audit expectation gap is defined as the difference between what the public expects from an audit and what the audit profession accepts the audit objective to be. The audit expectation gap is critical to the auditing profession because the greater the unfulfilled expectations of the public
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1.What are the pressures that lead executives and managers to “cook the books ” * Pressures from investors ……they want to see that the company/business is growing * Attract new investors ….for the business to grow * Personal reasons …greed and wanting more * Pressure form the big boss * Brand of the company … the business has been known to be a big brang * Slow/decline in the industry 1. What is the boundary between earning management and fraudulent reporting ?
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Sarbanes-Oxley Act (SOX) Name: Institution: The Impact of Sarbanes-Oxley Act (SOX) on IT audit and controls Abstract Experiences from various organizations and companies shows that the effects of the Information Technology audits that have been conducted in line with the Sarbanes Oxley as well as its IT section, which is the Section 404, displays significant differences with the kind of focus traditional IT audit does (NetIQ Corporation, 2006). Typically, traditional IT audit tends to focus
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After last several big accounting frauds that Unites States has gone through, auditors now carry a burden heavier than ever on their shoulders. Chap 5 introduced the different types of audit reports that can be issued when auditing a company’s financial statements, and also raised issues like loyalty to bosses and co-workers, expectation gap and internal control. When a fraud initiates, it is usually not because the involved person intends to commit a crime or he/she is immoral, instead, in most
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SARBANES-OXLEY ACT OF 2002 1 Introduction The Sarbanes-Oxley Act was passed in 2002 because of corporate scandals involving fraud and regulatory mismanagement in companies such as WorldCom and Enron. These companies went bankrupt after giving misleading or false financial reporting that indicated they were more financially healthy than they actually were. For example, Enron deliberately misrepresented significant percentage of
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