Question

The director of your accounting department has requested that you conduct research on the Sarbanes-Oxley Act of 2002 (SOX). Discuss what effects SOX has had on improving corporate governance, then research, identify, and summarize a specific corporate crime case or issue.

The summary should include a good description of the facts of the case, the issue before the court, the legal reasoning, and the decision or outcome (court’s ruling) of the case, if there is one. Lastly, state whether SOX has created more confidence in the capital markets or incorporate the legal terminology from your textbook where appropriate, in both your original post and in your responses to your classmates. Use academic or legitimate news sources, such as The New York Times, Los Angeles Times, Washington Post, CNN, MSNBC, Fox News, Soxlaw, etc. Please include the link or links used for your research in your post

Answer 1

Sarbanes–Oxley Act or SOX, is a United States federal law that set new or expanded requirements for all U.S. public company boards, management and public accounting firms. A number of provisions of the Act also apply to privately held companies, such as the willful destruction of evidence to impede a federal investigation.

The USA Government passed SOX act in 2002 to protect public from fraudulent practices by corporations and other business entities. The objective of this act is to increase transparency in financial reports. It is not only business law but also a good business practice. It provides set of rules and conditions which has to follow while auditing so that audit report can deliver more accurate financial data. Therefore, it enhances financial data security control. Through such a way it improves corporate governance, and also identify corporate crimes and frauds.

In 2014, CEO and CFO of QSGI Inc. Florida based company charged for violation of hiding internal control problems. They produced wrong presentation of internal control over financial reports. the court had ordered to pay $23000 as penalty and also banned the accountant for five years for practicing any audit. There are many cases like this which gained confidence in the minds of general investors and encourages them to invest more funds in the capital market as their money will be in safe hands due to SOX act.