Effects of Sarbanes Oxley Act (SOX) essays

Effects of Sarbanes Oxley Act (SOX) essays In response to the corporate scandals such as Enron, Adelphia, WorldCom and Tyco, the U.S. Congress passed the Sarbanes-Oxley Act (SOX) in an attempt to prevent the assortment of ills related to corporate finance and reporting (Grumet, 2007). This new legislation uses a series of steps designed to ensure that publicly traded corporations instituted adequate financial controls, that they documented those controls, and that they certified their accuracy. SOX enforced its goals with a very big stick: personal liability and the possibility of criminal penalties for corporate financial officers (Montana, 2007). Although a fairly recent piece of legislation, there are recent developments and issues involving SOX, that have come to light over the last two years. Montana (2007) notes that in the intervening years since SOX's inception, there have been a number of high profile events that have captured Congress' attention that has diverted their attention away from SOX. For this reason, he surmises, the Act itself remains un-amended. Regarding SEC regulations, the SEC has not promulgated any substantial new SOX rules since March 2004. Although the rules that were promulgated until that time were the source of much criticism, due to concerns about vagueness, recent tinkering with small bits of existing rules have not been able to adequately address these concerns. Another issue concerning SOX was the cost of compliance, which has been much higher than originally predicted. Of particular concern in the costs to comply with SOX section 404. This section addresses the internal control system certification provision, and has been deemed by many as unfair, especially for smaller businesses. Section 404 requires management at (...) companies to assess the effectiveness of their internal controls over financial reporting and issue their findings in a public report. The legislation also mandates that audito...