Sarbanes-Oxley and Corporate Governance

Paper Summary:

The paper discusses how the Sarbanes-Oxley Act took control of accounting regulation out of the hands of the accounting industry and placed it in the hands of the Public Company Accounting Oversight Board. The paper explains that the Act was passed in response to several corporate accounting scandals and was intended to restore public confidence in America's capital markets. The paper relates that while some are embracing the Act, voluntarily becoming SOX compliant, others are bypassing it completely due to its high costs, choosing instead to deregister their organization with the SEC.

Outline:
Introduction
Sarbanes-Oxley Act & Corporate Governance
Cost of Corporate Governance Due to SOX
Conclusion

From the Paper:

"The Sarbanes-Oxley Act (the Act), also known as the Public Company Accounting Reform and Investor Protection Act of 2002, or simply SOX, was enacted on July 30, 2002, as a response to a plethora of accounting scandals that had recently plagued corporate America. Powerful companies such as Tyco International, Enron, Adelphia, and WorldCom had fraudulently adjusted financial records that ended up costing shareholders billions of dollars, when the truth came to light and their stock prices plummeted. Sarbanes-Oxley is one of the most comprehensive pieces of accounting reforms, since the days of Franklin D. Roosevelt (Bumiller, 2002; Wegman, 2007). The aims of this legislature was to prevent future fraudulent corporate finance reporting, by tightening corporate governance regulations (Grumet, 2007)."

Sample of Sources Used:

• Basilo, T. (Jan 2007). Reducing Sarbanes-Oxley compliance costs. The CPA Journal, 77(1). Retrieved December 11, 2007, from ProQuest database.
• Bigalke, J. & Burrill, S. (Aug 2007). Time for a second look at SOX compliance. Healthcare Financial Management, 61(8). Retrieved December 11, 2007, from Business Source Complete database.
• Bradford, M. & Brazel, J. Flirting with SOX 404. Strategic Finance, 89(3). Retrieved December 11, 2007, from ProQuest database.
• Bumiller, E. (31 Jul 2002). Bush signs bill aimed at fraud in corporations." New York Times. Retrieved December 11, 2007, from Business Source Complete database.
• Grumet, L. (Nov 2007). Rethinking Sarbanes-Oxley. The CPA Journal, 11(7). Retrieved December 11, 2007, from ProQuest database.

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