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Unethical financial behavior.
Often called SOX, the Sarbanes Oxley Act was introduced in 2002 to oversee the regulations of finances at companies. It was enacted because of the problems and scandals uncovered and encountered at Enron and Worldcom.
The Sarbanes Oxley Act is a United States federal law enacted on July 30, 2002 in response to a number of scandals that include Enron and WorldCom. It was named after Senator Paul Sarbanes (D-MD) and Representative Michael G. Oxley (R-OH).The Act was approved by the House by a vote of 423-3 and by the Senate 99-0.George Bush called Sarbanes Oxley Act rules the "most far-reaching reforms of American business practices since Franklin Roosevelt was president".Objective of the Sarbanes Oxley Act: To restore public confidence in American business, which had been badly shaken by huge corporate scandals, such as those which led to the bankruptcies of Enron and WorldCom.The Sarbanes Oxley Act created a new regulator: the Public Company Accounting Oversight Board.
The Sarbanes- Oxley ACT
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What practices does Sarbanes-Oxley forbid
The Sarbanes-Oxley Act of 2002 (often-times referred to as "SOX") is named after Senator Paul Sarbanes and Representive Michael Oxley.
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All of the following requirements about internal controls were enacted under the Sarbanes- Oxley Act except; independent outside auditors must attest to the level of internal control. independent outside auditors must eliminate redundant internal controls. companies must develop sound internal controls over financial reporting. companies must continually assess the functionality of internal controls.
The Sarbanes-Oxley Act
Section 404 of the Sarbanes Oxley act brings into picture the aspect involving the internal control of an organization. It states that it is compulsory for companies who do Sec filling to focus on internal control. Still, organizations need to prepare adequate reports, which show correct financial information and minimize the risks. See link below:
The intent of these elements of Sarbanes-Oxley is to reduce the likelihood that material fraud will go undetected.
The Sarbanes-Oxley Act was enacted in 2002 in response to unethical and fraudulent behavior by the directors of the some of America's biggest corporations.
Financial Reporting
Consequently the U.S. Congress responded by passing the Sarbanes-Oxley Act (SOX) of 2002 in an attempt to restore investor confidence.
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