Question

What effect do you believe the Sarbanes Oxley Act of 2002 has had on the manufacturing industry in the United States? Please provide examples and figures where necessary to support your answer.

Answer 1

The Sarbanes Oxley Act of 2002 was focussed on financial accounting control and reporting. The aim of introducing the Act was to control any kind of fraudulent activities and misrepresentation that might be done by a company. The effect of this Act on the manufacturing industry was that they were forced to present the changes that were occuring in the manufacturing process at each and every step. The effect of each and every step in the production process can be seen on the financial performance of the company. For example: The spoilage of a particular chemical in the production of a medicine will affect the financial performance of the company. The company will have to report such changes in their financial report as Sarbanes Oxley act of 2002 emphasizes on real time reporting. This was not the practice earlier. Generally, manufacturing companies have buffer stock and so such incidents would earlier go unreported. But things have now changed under Sarbanes Oxley Act of 2002.