Question

Part 1: Financial Acumen

Keeping abreast of the financial measures and metrics employed by a company allows employees to better understand its health and position at any given time. Using Campbellsville University library link or other libraries and the Internet:

1. Review at least three (3) articles on financial acuity. Summary the articles in 400 – 600 words. Use APAformatting throughout including in-text citations and references.

2. Discuss the benefits of establishing solid financial acumen in a company? Discuss your personal experiences in a situation where financial acumen was either not supported as an organizational hallmark or, conversely, was built into the company's culture.

Part 2: Sarbanes-Oxley (SOX)

Write a 200-word commentary on Sarbanes Oxley and the importance this act has for American businesses today. Your commentary should include the following:

A. Rationale for SOX
B. Provisions of SOX
C. Enforcement of SOX

Answer 1

Sarbanes-Oxley Act (SOX):-

Enforcement of SOX :- SOX refers to Sarbanes-Oxley Act of 2002, also known as the Public Company Accounting reform and Investor Protection Act of 2002, is a United States federal law passed in response to a number of major corporate and accounting scandals including those affecting Enron and WorldCom. The Sarbanes-Oxley Act (commonly called SOX) establishes a new quasi-public company, the Public Company Accounting Oversight Board (PCAOB) for overseeing, regulating, inspecting and disciplining accounting firms in their roles as auditors of public companies.

Provisions of SOX :- The Sarbanes-Oxley Act's major and important provisions include the following :-

1). Creation of the Public Company Accounting Oversight Board (PCAOB).

2). A requirement that public companies evaluate and disclose the effectiveness of their internal controls, as they relate to financial reporting and that independent auditors for such companies "attest" to such disclosure.

3). A requirement that the companies listed on stock exchanges have fully independent audit committees.

4). Certification of financial reports by chief executive officers and chief financial officers.

5). Ban on the most personal loans to any executive officer or director of the listed public company.

6). Accelerate reporting of the insider trading practices.

7). Significantly longer maximum imprisonment sentences and larger fines for corporate executives who knowingly and willfully misstate the financial statements.

8). Prohibition of insider trades during the pension fund blackout periods.

Rationale of SOX :- The Sarbanes-Oxley Act requires that the monitoring function (including monitoring of work performed by management of public companies, Review of effectiveness of internal control system of the public companies etc.) must be done by an independent outside auditor so that auditor independence, effective corporate governance and system of enhanced financial disclosure can be maintained very effectively as well as efficiently.