Research and Discuss the Sarbanes-Oxley Act of 2002 Term Paper

Research and talk over the Sarbanes-Oxley guess of 2002 - Term Paper ExampleKey Components and Primary Objectives of the Act The basic matters identified and revise in the act included the creation of regulatory board to oversee the activities of the public accounting audited account firms, revised standards for auditors independence and audit committee, requirement of certification of the SECs reports by the executives of the public companies, restricts the rules to prevent insider dealings by the directors and executives, increase in the liability for the non-compliance to the federal securities laws and imposes supererogatory duty of the attorney to report non compliance and conflict of interests. (Lipman & Lipman. 2006) 1. Establishment of Public Company Oversight Board Sarbanes Oxley Act established the Public Company Accounting Oversight Board to oversee the audits of the public listed companies. It was established to rate the activities of the auditing firms including the i ssues of quality control, ethics and independence of auditors. The aim for its establishment was to increase the confidence of investors and general public. 2. Auditors Independence It focused on strengthening the auditors independence by prohibiting the provision of non-audit run (book keeping, internal audit, management, HR functions etc.) to the public companies by the outdoor(a) auditors, mandating the rotation of audit partners on a quin year basis and rotation of registered public accounting firms and ensuring no ethical issue arises between the external auditors and the company such as conflict of interest. 3. Enhanced Corporate Governance Requirements The corporate governance requirements were compound in many areas which included the role of audit committee which nave been responsible for the appointment, compensation and oversight of the pop off of external auditors, who are required to directly report to the audit committee. Further the audit committee should be made up of independent non- executive directors. Sarbanes Oxley Act further prohibits the maintenance of any credit or loan or extension of the same to directors or executives of the public companies. The Act even requires the executives such as CEO and the CFO of every public company to certify in each annual and quarterly report to the SEC that the reports have been reviewed and make the representation of the effectiveness of controls specified. 4. Enhanced Disclosure Requirements Sarbanes Oxley Act enhances the revelation requirements for the public companies which included increased reporting on the effectiveness of internal controls and pecuniary reporting procedures, disclosures on codes of ethics and explanations in case of non-compliance and disclosures about the transactions by the directors, management and other stakeholders that can accept security concerns. 5. Commission Resources and Enhanced Authority In order for the SEC to work effectively, provision of additional fu nding was ensured. Apart from that more power and authority was given to SEC and federal courts to be exercised on companies and individuals where prohibitions are required. It requires the federal regulatory bodies to conduct researches and make reports about the credit rating agencies, roles of investment banks and financial advisors, consolidation of accounting firms and some other matters etc. 6. Enhanced Accountability The Act strict the rules and regulations and imposes stricter and larger penalties regarding the breach of law, exercising improper