Question

How has the Sarbanes-Oxley Act affected the audit profession and corporate governance of public firms? (DQ 11-1)

Answer 1

Ans: Sarbanes-Oxley Act has definitely brought sweeping changes in the way audit practice was done and corporate governance was being handled for public firm, below are teh major changes effected through Sarbanes-Oxley Act:-

1) Public entities to hire independent directors for reviewing their accounting practices.

2) To stop the fraudulent activities, SOX audit brought the rule of segregation of audit duties.

3) SOX brings the layer that there should be corporate responsibility for the reports which are financial that means in a way CEO and CFO should be held responsible for any misrepresentation of financial data.

4) As per SOX act there has to be strong internal control to be setup so that there should be lessor or no scope for fraud.

5) Also SOX act made an for the protection of whistle blowers so that any one can speak about any thing wrong happening any where in the company.

So these were some major sweeping changes brought by SOX act.