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What is the Sarbanes-Oxley Act?

What is the Sarbanes-Oxley Act?

The Sarbanes-Oxley Act of 2002 is the United States, the Federal law passed in response to the recent major corporate and accounting scandals including those at Enron, Tyco International and WorldCom (now MCI). These scandals led to a decline in the confidence of the public accounting and practices. Named after Senator Paul Sarbanes (D - MD) and sponsors of 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. The legislation is complete and new or improved standards for all the boards of public company in U.S., management and public accounting firms. The first and most important part of the Act creates a new semi-Agency, the Public Company Accounting Oversight Board, which is responsible for supervising and disciplining accounting firms in their roles as auditors of public companies. Here are some important provisions of the Sarbanes-Oxley Act:

-Certification of financial reports of the officers of the Chief Executive and senior financial officers

-Independence of the Auditor, including purely and simply the prohibitions on certain types of work for the clients of the audit and pre-certification by the Audit Committee of the company of all other non-audit work

--A condition that companies listed on stock markets have fully independent audit committees which oversee the relationship between the company and the auditor

-Significantly more long sentences of imprisonment and large fines for leaders of companies who knowingly and wilfully inaccurate financial statements, although the maximum sentences are largely irrelevant, because judges in general the federal guidelines for the determination of the sentence to be followed in the actual sentencing

-Whistleblower of corporate fraud of protection employed who return to file a complaint with OSHA within 90 days, to win the recovery, pay and benefits, compensatory damages, reducing the commands and the reasonable legal fees and costs.

What is the Sarbanes-Oxley Act? - Internet Business Online News


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