Question

What are the major implications of the Sarbanes-Oxley Act to the audit and accounting profession?

Answer 1

The implications of the Sarbanes Oxley Act to the Accounting and Audit Profession are as follows:

1. The Sarbanes Oxley Act is a federal law that has put in place new and better and improved standards which are applicable for the Board of all the US public companies , Management and public accounting firms.
2. The Sarbanes Oxley Act has brought in changes in the organisation’s financial reporting functions and the processes and practices followed in the course of auditing by the public companies.
3. The Sarbanes Oxley Act makes the executives at the higher i.e top level responsible at a personal level for the financial information and data taking into account the importance of the time factor in relation to the financial data. It also focuses on the consequences that are of criminal nature that arises as a result of not complying with the rules and procedures and regulations.
4. The Sarbanes Oxley Act created an agency called the Public Company Accounting Oversight Board to monitor the functioning of the auditors of the public companies which in turn is monitored by the Securities and Exchange Commission . Public Company Accounting Oversight Board is responsible for monitoring and investigating the audits of the public companies and their auditors..
5. The Sarbanes Oxley Act is responsible for designing internal procedures in order to ensure that there is accuracy in the disclosure of the finances of the public companies. The CEO’s and the CFO’s are responsible personally for the certification of the quarterly and annual financial statements.