Executive Summary
Following essay speaks to Sarbanes-Oxley Act of 2002, more specifically; major provisions of the Act, pro's and con's, and ethical considerations.
The Sarbanes-Oxley Act of 2002 was signed into act on July 30th 2002. This act followed an overriding majority vote by both chambers of the U.S. Congress. The Act calls for alterations to fight accounting fraud, and establishes a new oversight board. Not to mention; enforce new penalties and an assortment of elevated values of corporate control.
The Sarbanes-Oxley Act is a direct reaction to the corrosion in civic confidence with regards to fiscal governance associations and recent scandals involving prominent public companies (i.e. Enron, Tyco and WorldCom). Some analysts believe Sarbanes-Oxley to be the most comprehensive reform of US securities law since the passing of the Securities Exchange Act in 1934.
Currently, provisions of the Act are being implemented by the Securities and Exchange Commission (SEC), which has substantially completed the process of setting its rules. The effects of the Act are far reaching as its provisions pertain to public accounting firms, attorneys, securities analysts as well as management, audit committees, and the boards of directors for public corporations.
Although the Act applies only to public corporations, it is sure to affect the entire business and investing environment. Analysts have stated that they "are already starting to see a cascading effect, which will eventually cause many privately-owned businesses, governmental, and non-profit entities to be affected through similar regulations and requirements." (bnet.com, 2005)
Major Provisions of Sarbanes-Oxley
The major provisions of the Sarbanes-Oxley Act are ...