Question

SOX designed and passed by Congress to close legal and ethical ambiguities that companies previously exploited. What are the most important lessons learned from SOX legislation concerning security violations? please no copy and paste and no handwriting please. thanks!

Answer 1

The Sarbanes-Oxley Act was passed by Congress in 2002 in the response of many financial scandals in early 2000s to close legal and ethical ambiguities that companies previously exploited. The most important lessons learned from SOX legislation concerning security violations are

• It is necessary to build investor’s confidence in the market
• The accountability of top management (CEO, CFO, etc.) should be fixed in the documentation and financial reporting of the company
• The auditing of the publicity traded companies should be done in independent manner and auditors should not have any conflict of interest in the company of audit.
• There should be transparency in internal accounting controls and procedures followed for financial reporting by the company
• Criminal penalty for the financial offenses and manipulation in securities law.
• Maintenance of records in electronic form through information technology (IT) departments.