Sarbanes-Oxley Act And Other Measures To Address Accounting Scandals

Sarbanes-Oxley Act And Other Measures To Address Accounting Scandals

In the wake of corporate scandals like Enron, Tyco International and WorldCom, which started the financial interests of thousands of shareholders and retirement plan investors, regulators and professional bodies have decided to tighten the noose around financial reporting standards.

Sarbanes-Oxley Act is a response to accounting practices detrimental had happened before. It seeks to restore public confidence in government ethics and guidelines for financial reporting.

If public confidence is crushed, it has particular concerns for as long as there was no certainty as to good accounting and auditing. Sarbanes-Oxley creates new standards for all public boards of directors of the United States, management and the audit community.

Some of the key provisions of the Act are:

A new agency, the Public Company Accounting Oversight Board to monitor the role of auditors of public companies.

In the future, executives and CFOs must certify their financial reports accurate.

Strict measures to establish greater independence of auditors, including the banning of certain types of tasks and pre-certification audit committee of the company other than auditing

Listed companies must have fully independent audit committee to examine the auditor-client interaction

prison sentences longer and more generous fines for corporate executives guilty of fraudulent misrepresentation

Protection of information to employees to OSHA within 90 days of call-back, damages, back pay and benefits and reasonable costs.

Regulatory agencies have also launched a thorough review of the audit guidelines and acceptable accounting practices. It is as if the drivers in connivance with the perpetrators. But insufficient to warrant disclosure of certain types of transactions could lead to landslides, although due care and diligence of the auditors. A famous judge said, "are like beads on control agencies are not detectives."

IOs mainly equipped with the auditors to state whether there have been transactions shady or questionable.

Thus, the data are an integral part of these accounts. They provide additional information on transactions that may be important for understanding the information in the statements. Information also predicate the officers of corporations apply GAAP in preparing financial statements.