Sarbanes-Oxley (SOX) Act of 2002

Paper Summary:

This paper outlines the events leading to the creation of the Sarbanes-Oxley (SOX) Act of 2002 and its major features. The author conducts this investigation within the contextual framework of well-known companies Symbol and WorldCom, which were publicly identified as companies that had compliance issues and faced serious failures in corporate governance. The paper also uses the CareNetWest situational analysis for a comparative analysis of risk management and other compliance issues related to the Symbol and WorldCom scenario. The paper concludes that SOX has been able to alleviate or at least deter poor financial reporting that either directly or indirectly had the objective to defraud individuals.

Table of Contents:
Introduction
Preceding the Sarbanes-Oxley Act - Symbol and WorldCom
Outcomes of the Compliance Issues with Symbol and WorldCom - Understanding Sox
Will the Act Be Successful - Avoiding another Symbol and WorldCom?
Comparative Analysis: Compliance Issues with CareNetWest, Symbol, and WorldCom
Conclusion

From the Paper:

"WorldCom were the main companies that led to the severe need for SOX. WorldCom in 2002 was fined by the Securities Exchange Commission, after it was found that the company improperly booked $3.8 billion dollars over five years that made revenues looked better than what they were and was used to 'trick' shareholders and investors with a blatant misrepresentation of the company's finances. WorldCom's actions were unethical and purposefully did not account for true cost and expenses which severely overstated profits."

Sample of Sources Used:

• Joyce, E. (2003)."Symbol Fraud Charge Spread: Probe Continues". Business. June 20. Retrieved on August, 12, 2007 from http://www.internetnews.com/bus-news/article.php/2225231
• Lever, K. (2006), "The conceptual framework: A preparer's view", UK Accounting Standards Board Roundtable Debate, September. Retrieved August 12, 2007 from http://www.frc.org.uk/documents/pagemanager/asb/Presentation%20by%20Ken%20Lever.pdf
• Lin, H. (2006). "Limitations of Section 404 of the Sarbanes-Oxley Act". The CPA Journal. March 2006 Issue. Retrieved on August 12, 2007 from http://www.nysscpa.org/cpajournal/2006/306/essentials/p48.htm
• Page, M. & Hines, T. (2006), 'Response to FASB/IASB preliminary views on objectives and qualitative characteristics of financial reporting', International Accounting Standards Discussion Papers, November. Retrieved August 12, 2007 from http://www.iasb.org/NR/rdonlyres/5AFFE376-B019-4874-9EFC-BA44B700EE3A/0/CL73.pdf

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