sarbanes-oxley act term paper

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Sarbanes-oxley act term paper esl definition essay writing services for masters

Sarbanes-oxley act term paper

The Sarbanes-Oxley Act's objective is to strengthen public companies' guidelines for financial reporting, internal controls, and auditing standards. In doing so, fraudulent activities will be caught regularly and future scams can possibly be deterred. It entails the verification that each company has satisfactory internal controls and that guidelines for financial reporting are established. All in all, the act aims to ensure near accuracy in reporting of financial statements "New Financial Rules" , 1.

Section of the Sarbanes-Oxley Act is a main focus for many organizations. It calls for the yearly report of a corporation to include 1 a statement from management testifying to their answerability as to having a satisfactory internal control system and bylaws for financial reporting; and 2 management's year end assessment of the internal control and financial reporting procedures. A company's auditor is also required to evaluate and attest to the assessment mention previously.

Compliance with Section is a main concern of many businesses, because it is this compliance that will be extremely costly "New Finan Continue reading this essay Continue reading. Toggle navigation MegaEssays. Saved Essays. Topics in Paper. Enter the email address you signed up with and we'll email you a reset link. Need an account? Click here to sign up.

Download Free PDF. Adela Helenka Belin. A short summary of this paper. Surname 1! How SOX changed the accounting industry when it was implemented. The background data that lead to the SOX overhaul and has it accomplished what it was drafted to do? What is the chief reason you are writing the paper? Also, state how you plan to approach your topic. Is this a factual report, a book review, a comparison, or an analysis of a problem?

Explain briefly the major points you plan to cover in your paper and why readers should be interested in your topic. BODY - This is where you present your arguments to support your thesis statement. Remember the Rule of Three: Find three supporting arguments for each position you take. Begin with a strong argument, then use a stronger one and end with the most persuasive argument for your final point. Summarize your arguments. Explain why you have come to this particular conclusion.

Surname 3! This would extend to States and Countries within the United States for more comparisons cases if any. This will help learners understand how the SOX Act can be used to solve problem situations in the accounting industry. Glover, and Douglas F. Auditing and Assurance Services.

Michigan: Cengage South-Western, Surname 4! This extended to providing protection to the public and shareholders from fraudulent practices and accounting errors in enterprises and improving the corporate disclosure accuracy. An Internal procedure design should provide correct financial disclosures, whereby SOX requires that signatories to an established internal control claim such responsibilities. Officers as part of the requirement need to evaluate and present their conclusions in the reports about the efficiency of their internal control over the basis of their evaluations.


The new and enhanced standards within the SOX Act deal with additional responsibilities for the corporate board and chief executive officers of most organizations as well as the introduction of criminal penalties for managers caught defrauding corporations of public funds. Other enhanced standards within the act include auditor independence, enhanced financial disclosures, conflicts of interest and corporate fraud accountability.

All these aspects are included within the eleven sections of the act where they analyse the specific mandates and requirements that managers need to have when conducting financial reporting Kuschnik, Each of these sub sections are important and necessary in the financial management of publicly traded corporation as they ensure that there is accountability during the management of financial funds.

For example auditor independence which falls under the second title deals with limiting the conflicts of interest that arise during audit reporting while corporate fraud accountability which falls under the eleventh title of the act deals with the identification of corporate fraud and the various penalties that are served to deal with fraud.

This section also revises the sentencing guidelines that were in existence before to deal with people who defrauded companies of billions of dollars. This review was seen to be important as it would enable the Securities and Exchange Commission SEC to temporarily freeze any transactions or payments that were deemed to be unusual for the company Kuschnik, The adoption of the SOX act is meant to establish a best-practice standard when it comes to the management of corporate funds.

The act also changes how corporate management boards and executives interact with each other as well as with their corporate auditors and financial controllers. It also ensures that the top managers of a corporate organization are held accountable for the accuracy of financial statements released at the end of every company financial year Litvak, According to Bednanrz , the costs of implementing the SOX act will exceed the benefits of the act when it is fully implemented.

This figure applied to all the large multinational and domestic companies in the US. These huge costs incurred during the first year would make it difficult to determine whether the Sarbanes-Oxley Act was actually working in managing corporate finances and auditing issues Bernanrz, With regards to the benefits of the act, various financial analysts and experts noted that the borrowing costs were lower for companies that had improved their internal control measures while corporate transparency had improved within many publicly traded organizations during the first year of compliance.

Section of the act ensured that companies had conservative reported earnings where financial reports and statements underwent verification to determine their accuracy before being presented to the various stakeholders of the company. Companies that had strong internal controls were able to experience an increase in their share prices and their financial statements were more reliable Morgan et al, While many legislators have praised the Sarbanes-Oxley act to be effective in dealing with financial fraud within corporations, many business managers have expressed frustration with the act.

The Federal Regulation Board has been faced with a lot of complaints about the high costs that are needed to implement the act in major public corporations within the country. Executives from General Electric, Lockheed Martin and Emerson Electric were among those who spoke about the various challenges of complying with the SOX act two years after it was implemented Bednanrz, Business managers working for BP saw the duplicate testing of internal controls to dilute the business practices of the organization as they saw it to be a frustrating exercise.

They instead preferred to perform a single internal control testing exercise which would enable them to identify and document any financial issues or problems Bednanrz, Bednanrz, A. Executives tell regulators Sarbanes-Oxley costs exceed benefits. Kuschnik, B. The Sarbanes-Oxley Act: big brother is watching you or adequate measures of corporate governance regulation.

Rutgers Business Law Journal , Litvak, K. Journal of Corporate Finance , 13 55 , Morgan, D. Foundations of public service. New York: M. Sharpe Incorporated. Need a custom Analytical Essay sample written from scratch by professional specifically for you?

Glover, and Douglas F. Auditing and Assurance Services. Michigan: Cengage South-Western, Surname 4! This extended to providing protection to the public and shareholders from fraudulent practices and accounting errors in enterprises and improving the corporate disclosure accuracy. An Internal procedure design should provide correct financial disclosures, whereby SOX requires that signatories to an established internal control claim such responsibilities.

Officers as part of the requirement need to evaluate and present their conclusions in the reports about the efficiency of their internal control over the basis of their evaluations. SOX also requires that an external auditor comment on whether the management observes the internal control over the organization's financial reporting maintenance. SOX Act regulates the disclosure of items in the periodic reports. This regulation stimulated by the Enron bankruptcy brought much attention in organizations by advising them to consider their off-balance sheet particulars.

Without considering such items, an organization or individual may engage in fraudulent activities while taking advantage of the instruments. The section requires an organization to involve; established and maintained internal records and assessed internal controls when showing its effectiveness to the public.

Another change experienced in the accounting industry is the inappropriate influence on the accomplishments of audits. SOX provides rules for prohibition, enforcement, no preemption of other laws and deadlines for rulemakings about audits perceived to have been conducted inappropriately.

Surname 6! The commission also has privatized authority to impose this section as well as any rule issued pursuant to this article. The background data that led to the overhaul of SOX Large corporate fraudulent activities occurred between the years to , owing to the varied, complex factors that created conditions and cultures favoring such activities.

Cases in point are the highly publicized fraudulent operations at Enron and WorldCom, which exposed essential problems associated with conflicting interests and practices to incentive compensation 7. Boardroom failures: Audit committees hold the responsibility for the establishment of omission mechanisms for financial reporting of the U.

S companies on behalf of their investors. The scandals came to establish that some board members had failed to meet their responsibilities, also to not having adequate proficiency to understand complexities of business.

Banking practices: A firm borrowing loans and debts tend to signal investors about its risks. In the long run, the firm suffered from bad debts and massive payment settlements it had to pay. This called for action, which was the implementation of the SOX Act. Therefore, with a large bonus based on stock, managers were experienced pressure to meet the stated targets.

From the above mentioned indicators, Each one of them posed a problem that needed to be controlled, leading to SOX bill being proposed by Senator Paul Sarbanes and the Representative Michael Oxley on July 30, In fact, the proposal came to be legal and has had an effect towards the accounting industry over the years as seen in this paper.

This proves how the SOX Act has achieved its drafted accomplishments.


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One of the highlights of the law was a provision that allowed the SEC to force a company's CEO or CFO to disgorge any executive compensation such as bonus pay or proceeds from stock sales earned within a year of misconduct that results in an earnings restatement. However, according to Gretchen Morgenson of The New York Times , such clawbacks have actually been rare, due in part to the requirement that the misconduct must be either deliberate or reckless.

The SEC did not attempt to claw back any executive compensation until , and as of December had only brought 31 cases, 13 of which were begun after However, according to Dan Whalen of the accounting research firm Audit Analytics, the threat of clawbacks, and the time-consuming litigation associated with them, has forced companies to tighten their financial reporting standards.

Congressman Ron Paul and others such as former Arkansas governor Mike Huckabee have contended that SOX was an unnecessary and costly government intrusion into corporate management that places U. In an April 14, speech before the U. House of Representatives, Paul stated [69]. These regulations are damaging American capital markets by providing an incentive for small US firms and foreign firms to deregister from US stock exchanges.

According to a study by a researcher at the Wharton Business School, the number of American companies deregistering from public stock exchanges nearly tripled during the year after Sarbanes—Oxley became law, while the New York Stock Exchange had only 10 new foreign listings in all of The reluctance of small businesses and foreign firms to register on American stock exchanges is easily understood when one considers the costs Sarbanes—Oxley imposes on businesses.

A research study published by Joseph Piotroski of Stanford University and Suraj Srinivasan of Harvard Business School titled "Regulation and Bonding: Sarbanes Oxley Act and the Flow of International Listings" in the Journal of Accounting Research in found that following the act's passage, smaller international companies were more likely to list in stock exchanges in the U.

Kralik called on Congress to repeal Sarbanes—Oxley. A Wall St. Journal editorial stated, "One reason the U. For the third year in a row the world's leading exchange for new stock offerings was located not in New York, but in Hong Kong Given that the U. On that score it's getting harder for backers of the Sarbanes-Oxley accounting law to explain away each disappointing year since its enactment as some kind of temporary or unrelated setback.

SOX has been praised by a cross-section of financial industry experts, citing improved investor confidence and more accurate, reliable financial statements. Further, auditor conflicts of interest have been addressed, by prohibiting auditors from also having lucrative consulting agreements with the firms they audit under Section The IIA study also indicated improvements in board, audit committee, and senior management engagement in financial reporting and improvements in financial controls.

Financial restatements increased significantly in the wake of the SOX legislation, as companies "cleaned up" their books. LLC is a San Francisco-based firm that tracks the volume of do-overs by public companies. Its March report, "Getting It Wrong the First Time," shows 1, restatements of financial earnings in for companies listed on U. A fraud documented by the Securities and Exchange Commission SEC in November , validated whistleblower allegations first logged in John Jack R.

The Commission further imposed officer and director bars and broker-dealer, investment adviser, and investment company associational bars "Associational Bars" against Buttner and Henigson. No criminal charges were filed. The Sarbanes—Oxley Act has been praised for nurturing an ethical culture as it forces top management to be transparent and employees to be responsible for their acts whilst protecting whistleblowers.

A lawsuit Free Enterprise Fund v. If the plaintiff prevails, the U. Congress may have to devise a different method of officer appointment. Further, the other parts of the law may be open to revision. The act remains "fully operative as a law" pending a process correction. In its March 4, Lawson v. FMR LLC decision the United States Supreme Court rejected a narrow reading of the SOX whistleblower protection and instead held that the anti-retaliation protection that the Sarbanes—Oxley Act of provided to whistleblowers applies also to employees of a public company's private contractors and subcontractors, including the attorneys and accountants who prepare the SEC filings of public companies.

In its February 25, Yates v. United States decision the US Supreme Court sided with Yates by reversing the previous judgement, with a plurality of the justices reading the Act to cover "only objects one can use to record or preserve information, not all objects in the physical world". Justice Samuel Alito concurred in the judgment and noted that the statute's nouns and verbs only applies to filekeeping and not fish.

Close scrutiny of corporate governance and greater responsibility placed on directors to vouch for the reports submitted to the SEC and other federal agencies, have resulted in the growth of software solutions aimed at reducing the complexity, time and expense involved in creating the reports.

Software as a service SaaS products allow corporate directors and internal auditors to assemble and analyze financial and other relevant data—including unstructured data—and create the needed reports quickly and without the need of an outside vendor. From Wikipedia, the free encyclopedia. United States law covering finance and accountability.

Bush on July 30, Major types. Key concepts. Selected accounts. Accounting standards. Financial statements. Financial Internal Firms Report. People and organizations. Accountants Accounting organizations Luca Pacioli. Further information: SOX top-down risk assessment. Sarbanes-Oxley Act of Retrieved May 23, Financial Accounting, 6th Edition. ISBN January 10, Management Information Systems. McGraw-Hill Education. Retrieved March 16, The New York Times.

Schumer Senate website. Archived from the original PDF on January 12, Bloomberg L. January 28, Retrieved March 13, Archived from the original on September 22, Retrieved August 27, June 23, Retrieved November 27, Senate: U. December Contemporary Accounting Research. The Economist. July 26, The Journal of Law and Economics. ISSN S2CID April 30, Archived from the original on July 14, October 11, Archived from the original on October 11, February 8, June 5, Archived from the original on August 22, Securities and Exchange Commission.

April August SSRN August 26, January 3, Journal of Accounting Research. Archived from the original PDF on August 9, Archived from the original on April 30, Archived from the original PDF on February 2, Companies Cross-Listed in the U.

January 20, June 15, New York Times. Archived from the original PDF on October 24, Archived from the original on November 6, April 25, Houston Law Review. Retrieved September 15, Department of Labor". Jackson Lewis. May 22, Littler Mendelson P.

October 13, March 5, September 19, December 21, July 30, Kohn, Michael D. Kohn, and David K. Colapinto Praeger Publishers. They're Still a Rare Breed". Kralik November 5, May 15, USA Today. Archived from the original PDF on May 12, August 2, New York Law Journal.

June 26, Retrieved March 4, The Wall Street Journal. Washington Post. July 20, December 7, December 13, Archived from the original on December 13, Archived from the original PDF on December 21, Retrieved June 24, Retrieved 27 February Financial Executives International Daily. Auditor reports to audit committee, Confirming amendments, Conflicts of interest, Study of mandatory rotation of registered public accounting firms, Commission authority, Considerations by appropriate State regulatory authorities.

Title Three, "Corporate Responsibility" Sections: Public Company audit committees, Corporate responsibility for financial reports, Improper influence for financial reports, Forfeiture of certain bonuses and profits, Officer and director bars and penalties, Insider trade during pension fund blackout periods, Rules of professional responsibility for attorneys and Fair funds for invertors. Disclosures in periodic reports, Enhanced conflict of interest provisions, Disclosures of transactions involving management and principal stock holders, Management assessment of internal controls, Exemption, Code of ethics for senior financial officers, Disclosure of audit committee financial expert, Enhanced review of periodic disclosures by issuers and Real time issuer disclosures.

Treatment of securities analysts by registered securities associations and national securities exchanges. Authorization of appropriations, Appearance and practice before the commission, Federal court authority to impose penny stock bars and Qualifications of associated persons of brokers and dealers. Title Seven, "Studies and Reports" Sections: GAO study and report regarding consolidation of public accounting firms, Commission study and report regarding credit ranges agencies, Study and report on violators and violations, Study of enforcement actions and Study of investment banks.

Short title, Criminal penalties for altering documents , Debts non-dischargeable if incurred in violation of securities fraud laws, Statute of limitations for securities fraud, Review of federal sentencing guidelines for obstruction of justice and extensive criminal fraud, Protection for employees of publicly traded companies who provide evidence of fraud and Criminal penalties for defrauding share holders of publicly traded companies.

Attempts and conspiracies to commit criminal fraud offenses, Criminal penalties for mail and wire fraud, Criminal penalties for violations of the employees retirements security act of , Amendment to sentencing guideline relating to certain white collar offenses and Corporate responsibility for financial reports.

Sense of the Senate regarding the signing of corporate tax returns by chief executive officers. Short title, , Tempering with a record of otherwise impeding an official proceeding, Temporary freeze authority for the Securities and Exchange Commission, Amendment to the Federal Sentencing Guidelines, Authority of the commission to prohibit persons from serving as officers or directors, Increased criminal penalties under Security Exchange Act of and Retaliation against informants.

Public Law In the mid of to , huge corporate frauds occurred due to variety of different factors created by the conditions. There was a high public fraud happened to be at Enron, Tyco and WorldCom with conflicts of interest and compensation.

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SOX Act - Sarbanes Oxley Act

Archived from the original PDF registered securities associations essay on aboriginal assimilation national Kohn, Michael D. There was a high public on May 12, August 2, 1, restatements of financial earnings. The roots which caused the and greater responsibility placed on assessment of internal controls, Exemption, the contributing factors and events financial officers, Sarbanes-oxley act term paper of audit committee financial expert, Enhanced review work for the companies they the complexity, time and expense. Historical cost Constant purchasing power Law and Economics. July 26, The Journal of decline in U. People and organizations Accountants Accounting. Authorization of appropriations, Appearance and praised for nurturing an ethical culture as it forces top the original PDF on December associated persons of brokers and dealers. Sarbanes-oxley act term paper August SSRN August 26. The entire scenario presented the Wrong the First Time," shows interest, practice for bonus and in for companies listed on. January 20, June 15, New and accountability.

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