Sarbanes-Oxley Act of 2002 Article Review Essay Example for Free

Sarbanes-Oxley Act of 2002 article Review EssayThe Sarbanes-Oxley Act was a daring attempt to legislate morality with the intentions of restoring integrity with the universal in financial markets. The Sarbanes-Oxley Act is a direct result from corporate scandals like WorldCom, Enron, Adelphia, and Tyco, which succeeded in the break dance of these major corporation and ruined peoples lives. The mistreatment of employees and investors by flagrantly un good business practices equal some their life savings and retirement portfolios while others went to jail because they were part of the scandals. The provision regarding ethics in business contained within the Sarbanes-Oxley Act help to ensure and deter unethical business practices. There atomic number 18 two particular provisions that baffle a big effect on organizations on their ethical decision making. The first is the requirement corporations must create a code of ethics for senior financial officers that include enforcemen t mechanisms and the regular gyration of outside auditors.There are other requirements such as office 303 improper influence on conduct of audits, Section 306 insider trades during pension fund blackout periods, and Section 307 which terra firma rules of responsibility for attorneys, (Orin, 2008) but the first two mentions have the power collectively to regulate corporations internally and externally. The calculate of Ethics is a schematic for each corporation for governance within the organization to regulate and found acceptable standards for directors, officers, accountants, and employees.The mandatory rotation of auditors ensures the organization has a truly independent audit that allows auditors to question and pink business practices of the corporation experiencing the audit. The SOX should have went one step farther by mandating audit firm rotation rather than just rotation of the lead person doing the audit, which would ensure complete independence of the audits. The r otation leave ensure if one auditor misses unethical practices or is part of it will be discovered and better with the rotation.The out-of-pocket expense for compliance has many critics who say this is an unfair burden on corporations however have made significant strides against unethical business practices. The criminal penalties for which the act provides includes fines, imprisonment, loss of exchange listing, and loss of DO insurance depending on which section of the SOX the corporation is out of compliance with. The CFO or CEO who unwittingly submits a wrong certificate could be fined up to one million and up to 10 days of prison, if knowingly then he or she could be subject up to five million and up to 20 years imprisonment.The ultimate incentive, which may prove to be the sine qua non, is that a failure to do so could expose them to the disastrous possibility of being deemed to have embraced these historical problems and to become accountable for them as their own (Orin, 2008). The Sarbanes-Oxley Act was drafted by Representative Michael Oxley and Senator Paul Sarbanes, which was intended to protect investors by ensuring/improving the reliability and accuracy of corporations disclosures of corporate financial performances.The SOX ensures that executives are held accountable for all financial render even if unknown, forcing them to become more involved and monitor the accuracy of what is being reported to be admittedly and accurate. References Orin, R. M. (2008). Ethical Guidance and Constraint Under the Sarbanes-Oxley Act of 2002. Journal Of Accounting, Auditing Finance, 23(1), 141-171. SOX-Online, (2012). Sarbanes-Oxley essential information. Retrieved from http//www. sox-online. com/basics. html