Prepared by: Maged Soliman
Subject: Sarbanes-Oxley recommendations
In this essay I would like to discuss the implications of the Sarbanes-Oxley (SOX) legislation. This essay provides a brief history of SOX's creation, explains the relationship amongst the FASB, SEC and PCAOB, describes the pros and cons of SOX, assesses the impacts of SOX, and lists ethical considerations of SOX.
History of SOX - the Sarbanes-Oxley Act of 2002 is legislation in response to the high profile financial scandals, such as seen with Enron and WorldCom. The purpose of this act is to protect shareholders and the general public from accounting errors and fraudulent business practices. The Sarbanes-Oxley Act introduced stringent new rules to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws. Sarbanes-Oxley is not a set of business practices and does not specify how a business should store records; rather, Sarbanes-Oxley defines which records are to be stored and for how long.
The relationship among the FASB, SEC and PCAOB SOX are administered by the Securities and Exchange Commission (SEC). The SEC sets deadlines for compliance and publishes rules on requirements. The Securities and Exchange Commission (SEC) is the department to which all publicly-traded companies, effective since 2004, are required to submit annual reports of the effectiveness of their internal accounting controls. The SEC has broad authority over all aspects of the securities industry. This includes the power to register, regulate, and oversee brokerage firms, transfer agents, and clearing agencies. Along with them, is the FASB.
The Financial Accounting Standards Board (FASB), is a professional standards board created ...