The Sarbanes-Oxley Act, named after Senator Paul Sarbanes and Representative Michael G. Oxley, was signed into the U.S. law on July 30, 2002. The law was signed by President Bush to put forth the necessary efforts “to protect the investing public from officers of corporations and auditing firms who fraudulently misrepresent the financial stability of the corporation” (Fujitsu.com). In other words, the Act was designed enforce the improvement on the reliability and accuracy of corporate disclosures. The Sarbanes-Oxley Act was introduced due to the bankruptcies of Enron, Global Crossing, Adelphia, and WorldCom and the fact that they had hidden their true financial standings from creditors and shareholders until they were unable to meet their financial obligations which resulted in the exposure of significant losses.
The Sarbanes-Oxley Act is arranged into eleven titles. However, six major points will be discussed in this paper.
1. Section 302--Corporate Responsibility for Financial Reports: this section requires that the principal executive officer, or the principal financial officer, or person performing similar functions, certify in each annual or quarterly report filed or submitted that:
• The signing officer has reviewed the report
• The report does not contain any material untrue statements or material omission or be considered misleading
• The financial statements and related information fairly present the financial condition and the results in all material respects
• The signing officers are responsible for internal controls and have evaluated these internal controls within the previous ninety days and have reported on their findings a list of all defi ...