Question

Explain the Sarbanes Oxley Act. Do you feel that embracing an act like this would prevent fraud? Why or why not?

Answer 1

Sarbanes Oxley Act:-  The Sarbanes-Oxley Act was signed into law on 30 July 2002 by President Bush. The Act is designed to oversee the financial reporting landscape for finance professionals. Its purpose is to review legislative audit requirements and to protect investors by improving the accuracy and reliability of corporate disclosures. The act covers issues such as establishing a public company accounting oversight board, auditor independence, corporate responsibility and enhanced financial disclosure. It also significantly tightens accountability standards for directors and officers, auditors, securities analysts and legal counsel.

Key Features of Sarbanes Oxley Act:-

1 Public Company Accounting Oversight Board

2 Corporate Responsibility

3 Auditor Independence

4 Enhanced Financial Disclosures

5 Analyst Conflicts of Interest

6 Commission Resources and Authority

7 Studies and Reports

8 Corporate and Criminal Fraud Accountability.

9 White Collar Crime Penalty Enhancement

10 Corporate Tax Returns

11 Corporate Fraud Accountability

Yes, we feel that embracing an act like this would prevent fraud. Because Title XI consists of seven sections. Section 1101 recommends a name for this title as "Corporate Fraud Accountability Act of 2002". It identifies corporate fraud and records tampering as criminal offenses and joins those offenses to specific penalties. It also revises sentencing guidelines and strengthens their penalties. This enables the SEC to resort to temporarily freezing transactions or payments that have been deemed "large" or "unusual".