Question

does sarbanes oxley has had an intended effect on business integrity

Answer 1

BASIC INTRODUCTION :The Sarbanes-Oxley Act of 2002 is a U.S. federal legislation that seeks to ensure that companies with public shareholders accurately represent their financial state so that investors better understand risks. To achieve this, Sarbanes-Oxley (SOX) mandated greater auditor independence, increased corporate governance and documentation of corporate internal controls, and enhanced financial disclosures.

NOW COMING TO THE QUESTION :To some extent sarbanes oxley hasn't had an intended effect on business integrity. Sarbanes-Oxley is thought by many as the answer to fraud, but my experience shows something different. Sarbanes-Oxley was intended to restore faith in the integrity of corporations and executives, yet it hasn’t really had a measurable impact on fraud.

Rules under Sarbanes-Oxley created an expensive paperwork exercise for companies. They have reams and reams of paper that document what and how the company does in regards to financial data and operations. Yet that documentation itself doesn’t prevent fraud.

In the rush to come up with something to pacify investors and the general public, the legislation lacked the impact for which everyone was hoping. Instead of requiring companies to proactively prevent and detect fraud, the law really requires just detailed documentation of procedures.