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Tha Sarbanes Oxley Act of 2002

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Runninghead:Sarbanes-Oxley Act of 2002 1
Sarbanes-Oxley Act of 2002
Lisa Mains
ACC/561
Kimberly Warren
March 17, 2014

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Runninghead:Sarbanes-Oxley Act of 2002 2
Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002 (SOX) resulted from the consequences of the financial
disasters perpetuated by financial institutions such as Enron, Worldcom, and even the Savings
and Loan debacles that served to fool and cripple the financial markets. As a result of their
deceptive accounting practices, many investors lost millions of dollars. SOX was signed into law
by President George Bush on the 30
th
day of July in the year 2002. The Act was lawmakers and
legislators reaction to highly publicized financial reporting scandals like the ones involving
Enron and WorldCom that had shaken investors' confidence in financial reporting and auditing
and negatively influenced the quality of earnings from improper recognition of different items
such as operational expenses on the income statement or liabilities on the balance sheet. The
intended purpose of the SOX Act is to protect investors by improving the accuracy, and
reliability of corporate financial reporting disclosures made pursuant to the securities laws, and
for other purposes (James, 2006). The provisions of the SOX directly or indirectly affects several
business professionals, including CPAs, managers and executives, financial statement analysts,
and even lawyers. The provisions of the SOX are described in eleven titles, each one including
numbers of subsections. SOX also offers harsh penalties for SOX violations, which constitute
violations of the Securities Act of 1934 (James, 2006). The Sarbanes-Oxley Act of 2002 will be
explored and described and its intended impact to prevent unethical accounting practices
addressed as well as an evaluation of whether SOX will be effective in conclusion, in the
paragraphs that follow.
The primary goals and tenets of SOX with respect to fraud
The primary goals and tenets of the Sarbanes-Oxley Act of 2002 (SOX) are focused on

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Sarbanes-Oxley Act of 2002 Lisa Mains ACC/561 Kimberly Warren March 17, 2014 Sarbanes-Oxley Act of 2002 The Sarbanes-Oxley Act of 2002 (SOX) resulted from the consequences of the financial disasters perpetuated by financial institutions such as Enron, Worldcom, and even the Savings and Loan debacles that served to fool and cripple the financial markets. As a result of their deceptive accounting practices, many investors lost millions of dollars. SOX was signed into law by President George Bush on the 30th day of July in the year 2002. The?Act?was lawmakers and legislators reaction to highly publicized financial reporting scandals like the ones involving Enron and WorldCom that had shaken investors' confidence in financial reporting and auditing and negatively influenced the quality of earnings from improper recognition of different items such as operational expenses on the income statement or liabilities on the balance sheet. The intended purpose of?the?SOX Act?is to protect investors by improving the accuracy, and reliability?of?corporate financial reporting disclosures made pursuant to the securities laws, and for other purposes (James, 2006). The provisions?of?the SOX directly or indirectly affects several business professionals, including CPAs, managers and executives, financial statement analysts, and even lawyers. The provisions?of?the SOX are described in eleven titles, each one including numbers?of?subsections. SOX also offers harsh penalties ...
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