Question

Why was the Sarbanes-Oxley Act enacted? Describe three aspects of the Sarbanes-Oxley Act that are designed to improve the financial reporting process. What are your thoughts regarding the Sarbanes-Oxley Act?

Answer 1

Solution:

The Sarbanes-Oxley Act was signed into law on 30 July 2002 by President Bush. The Act is intended to regulate the financial revealing landscape for fund experts. Its motivation is to survey administrative audit prerequisites and to ensure investors by improving the exactness and reliability of corporate exposures. The act covers issues, for example, setting up an open organization accounting oversight board, auditor freedom, corporate duty and improved financial reporting. It likewise fundamentally fixes responsibility norms for executives and officers, auditors, protections analysts and legitimate counsel. The law is named after Senator Paul Sarbanes and Representative Michael G. Oxley.

The Sarbanes-Oxley Act of 2002 came in the wake of a portion of the country's biggest financial scandals, including the liquidations of Enron, WorldCom, and Tyco. In that capacity, the Act is generally considered to contain the absolute most sensational changes to government protections laws since the 1930s.

This activity requires information on the reporting and guideline condition or environment for GLIBR process .

The general significance of sarbanes - oxley Act on the financial framework:

• It makes the CEO and the CFO of the organization liable for budgetary system .
• it implements penalties up to $5 million and 20 years jail for infringement or violations.
• It expects organizations to utilize straightforward or transparent reporting and stick to the GAAP.
• It attempts to execute consistent auditing that is a continuous reporting all transactions and changes in the associations financial part.

Overall, the importance of sarbanes-oxley Act is that it makes individuals in the association progressively responsible for their actions.Also it gives consolation to investors ,that the data on associations they have is right and trustworthy.