SARBANES-OXLEY PAPER 5 Sarbanes-Oxley Paper Name University of Phoenix ACC/340 Professor: Richard Calabria June 20, 2011 Running head: SARBANES-OXLEY PAPER 1 Sarbanes-Oxley Paper The United States federal Sarbanes-Oxley Act was founded to improve the accuracy and reliability to ultimately protect investors. The Act is known as the Public Company Accounting Reform and Protection Act of 2002. The Act was signed into law on July 30, 2002. The Reason for Passage During the late 1990s and early parts of the year 2000 many acts of corruption in business world went on without a regulation to stop it. The Sarbanes-Oxley Act of 2002 (often shortened to SOX) is legislation enacted in response to the high-profile Enron and WorldCom financial scandals to protect shareholders and the general public from accounting errors and fraudulent practices in the enterprise (Spurzem, 2006). Following these scandals the President of the United States of America at the time President George Bush push for the act to be pass by the house and senate so he could sign it into law to protect investors. The act passed the House 423-3 and the Senate 99-0 and was promptly signed into the law by the president. Once passed the act has been view as the most extensive measure to attempt to improve business accounting regulations since the Security and Exchange Act of 1934. The ACT is a direct attempt to keep businesses from intentionally committing financial fraud and misleading their stockholders and investors. The ACT requires organizations to administer far-reaching corporate governing policies to anticipate and stop fraudulent activities with an organization and to react accordingly. The Sarbanes-Oxley Act is administered by the Securities and Exchange Commission, and gives clear guidelines on which organizational records need to be kept and for how long they must be kept. The enforcers of the act believe improving accuracy and reliability of corporate disclosures and financial reports given to investors in public companies improve protection. The Securities and Exchange Commission has established harsher civil and criminal penalties for violations of securities laws, and inflicted to be significantly longer jail sentences and larger fines for corporate executives who knowingly and willfully falsify financial statements. Sec. 802(a) "Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both(United States Congress, 2002)." How has it affect Affected the Accounting Society The Sarbanes-Oxley Act required a Public Compa.

1. SARBANES-OXLEY PAPER 5
Sarbanes-Oxley Paper
Name
University of Phoenix
ACC/340
Professor: Richard Calabria
June 20, 2011
Running head: SARBANES-OXLEY PAPER 1
Sarbanes-Oxley Paper
The United States federal Sarbanes-Oxley Act was founded to
improve the accuracy and reliability to ultimately protect
investors. The Act is known as the Public Company Accounting
Reform and Protection Act of 2002. The Act was signed into
law on July 30, 2002.
The Reason for Passage
During the late 1990s and early parts of the year 2000 many
acts of corruption in business world went on without a
regulation to stop it. The Sarbanes-Oxley Act of 2002 (often

2. shortened to SOX) is legislation enacted in response to the
high-profile Enron and WorldCom financial scandals to protect
shareholders and the general public from accounting errors and
fraudulent practices in the enterprise (Spurzem, 2006).
Following these scandals the President of the United States of
America at the time President George Bush push for the act to
be pass by the house and senate so he could sign it into law to
protect investors. The act passed the House 423-3 and the
Senate 99-0 and was promptly signed into the law by the
president. Once passed the act has been view as the most
extensive measure to attempt to improve business accounting
regulations since the Security and Exchange Act of 1934. The
ACT is a direct attempt to keep businesses from intentionally
committing financial fraud and misleading their stockholders
and investors. The ACT requires organizations to administer
far-reaching corporate governing policies to anticipate and stop
fraudulent activities with an organization and to react
accordingly. The Sarbanes-Oxley Act is administered by the
Securities and Exchange Commission, and gives clear
guidelines on which organizational records need to be kept and
for how long they must be kept. The enforcers of the act believe
improving accuracy and reliability of corporate disclosures and
financial reports given to investors in public companies improve
protection. The Securities and Exchange Commission has
established harsher civil and criminal penalties for violations of
securities laws, and inflicted to be significantly longer jail
sentences and larger fines for corporate executives who
knowingly and willfully falsify financial statements. Sec. 802(a)
"Whoever knowingly alters, destroys, mutilates, conceals,
covers up, falsifies, or makes a false entry in any record,
document, or tangible object with the intent to impede, obstruct,
or influence the investigation or proper administration of any
matter within the jurisdiction of any department or agency of
the United States or any case filed under title 11, or in relation
to or contemplation of any such matter or case, shall be fined
under this title, imprisoned not more than 20 years, or

3. both(United States Congress, 2002)."
How has it affect Affected the Accounting Society
The Sarbanes-Oxley Act required a Public Company Accounting
Oversight Board to be established. The Public Accounting
Oversight Board (PCAOB) is responsible establishing codes of
ethics for financial reporting and the monitoring of accounting
firms that audit public corporations. The PCAOB is a nonprofit
corporation established by Congress to oversee the audits of
public companies to protect the interests of investors and
further the public interest in the preparation of informative,
accurate, and independent audit reports (Johnson, 2011). Public
accountants that provide services to public companies are
required to be registered with the Public Company Accounting
Oversight Board.
Section 404 - Management Assessment of Internal Controls
This section requires that the Chief Executive Officer (CEO)
and the Chief Financial Officer (CFO) confirm the effectiveness
of their company’s internal controls for financial reporting.
Section 404 also specifies that each annual report of an issuer
will contain an internal control report and that it will clearly list
the responsibility of management for establishing and
maintaining an adequate internal control structure, and will
contain an assessment of the effectiveness of the internal
control structure and procedures of the issuer for financial
reporting (United States Congress, 2002).
Conclusion
In conclusion, the President signed the Sarbanes-Oxley Act into
laws to reduce financial crimes and fraud committed by
corporate insiders. These types of crimes are unacceptable, and
are bad for business in the United States and in the world of
business as a whole. Many investors’ life savings were
destroyed by corporate insiders and if the ACT had been in
place many investors would have been protected. With all the
modifications and changes that are now enforced the business
world is a much safer place when it comes to investing.
Although the changes have drastically improved the process, I

4. still believe there are more actions that can be taken to
safeguard the investors. Even with regulations the heart of the
plan lies in developing an ethical balance because all profits are
not good especially when it is at the expense of unknowing
investors that have their life savings invested.
References
Johnson, J. (2011). PCAOBOVERSEES.
pcaobus.org/Pages/default.aspx
United States. Congress (107th, 2nd session: 2002) (2002)
Sarbanes-Oxley Act of 2002: conference report. Washington,
D.C.: U.S. G.P.O.
Spurzem, B. (2006). Sarbanes-Oxley Act (SOX). Retrieved from
http://searchcio.techtarget.com/definition/Sarbanes-Oxley-Act