Question

Describe the Sarbanes-Oxley Act. Why was the act enacted? What is the impact? Do you think it will stop accounting corruption? Why or why not?

Writing assignment 500 words (NO PLAGIARIZE). Please help I know nothing about this topic.

Answer 1

Step -1 ( Meaning of SARBANES OXLEY ACT )

SARBANES OXLEY ACT- SARBANES OXLEY ACT was enacted on 30 July 2002 to protect the interests of investors from fraudulent financial reporting by company etc. Many fraudulent activities had happened before the enactment of law. So, U.S Congress passed this Act and also created many strict penalties for violating the rules and policies. It also established the Public Company Accounting Oversight Board which communicates the standards for public accountants and help them to audit companies with ethics and under those standards.

STEP-2 ( WHY THE ACT ENACTED?)

As, we read above the SARBANES OXLEY ACT was enacted on 30 July 2002 to protect investors, shareholders from the fraudulent activities like company'ies show increase value of investment etc to show their financial statements and performance excellence. It gave standards and guidelines for auditing and removing false information from the financial statement and reports. It was enacted to reduce fraudulent activities and corruption.

STEP-3( WHAT IS THE IMPACT?)

• SARBANES OXLEY ACT,2002 mainly focus on investor's interest and protect them from fraudulent activities by the companies.
• SARBANES OXLEY ACT close the loopholes which enables company to fraud the investor.
• It reduces the fraudulent activities Since the enactment of the SARBANES OXLEY ACT.
• It has created so many criminal penalties for those who will violate this act
• It make Audit committee independent of management system which reduce this types of fraudulent activities.
• It makes financial statements more accurate and reliable so, there will be transparency between two parties of company.
• As, by this ACT Audit committee become independent which help them to strengthen their committee and also help them to perform several tests and Auditing.

STEP-4 ( OPINION ON IT WILL OR WILL NOT STOP ACCOUNTING CORRUPTION)

I think it will stop Accounting Corruption as it has enacted so many criminal penalties and laws to protect the interests of investors, shareholders which help to reduce the fraud in the company. Companies also scared of this act as if they do any illegal Accounting practices, they can get punishment for it. This Act is really a boon or a movement towards the transparency of the financial statements which adhere the rules and regulations of Accounting standards which directly or indirectly reduce the Accounting Corruption.