Facts About Sarbanes Oxley Act Summary
The Sarbanes Oxley act of 2002 came into legislation on the last day of April in the year of 2002. The act became a law by almost 100 percent majority in the house and was initiated in order to safe guard the interests of the investors and to re instate the faith which the investors had lost in the industry and its trading patterns. The law is the brain child of senator Paul Sarbanes and fellow Michael Graver Oxley. The basic ideology behind the act was the safeguarding of the interest of the investors and the general public at large. The Sarbanes Oxley act summary is as follows:
- The act laid the guidelines which the board of any company must abide to.
- The board of the company is legally bound to ensure the registration of all accounting firms (public).
- The Sarbanes Oxley act summary also set standards for audit reports preparations like the quality control, auditing, independence, ethics, and other similar standards. - The act consists of 11 sections detailing the various aspects of the guidelines for industries. - The boards are responsible for the conduction of inspections of the various accounting firms. - The board must conduct disciplinary proceedings and investigations. It should impose the necessary sanctions whenever needed. - According to the Sarbanes Oxley act summary, the board must ensure that the act is being complied by all the companies. - The board is responsible for the management of the staff and the budget of the firm. - The act suggests that the auditors should be rotated and thus promotes auditor rotation. The acts main area of focus was the importance which is attached to proper and efficient professional care. The act was widely hated by all firms as it prohibited them from providing audit clients. The act also prohibits them from performing various other functions like non-audit services; audit contemporaneously, other services like internal audit outsourcing of audits, and various other expert services. As per the Sarbanes Oxley act of 2002, various services like tax services and similar others are permissible only after being pre approved by the audit committee of the issuer. The act does not mark the boundary for various audit services. The Sarbanes Oxley act summary is also extremely significant to the common man. The act has had wide spread and majorly beneficial impacts on the investors. It has to a great extent help in the re instatement of the faith in the investors. The various regulations and sections of the act, along with the sub sections have led to decreased number of corporate scandals and scams. The act in itself was constituted to release the economy and safeguard it from the various and vast number of scandals that were cropping up. The act is probably the most influential economical legislation of the decade gone by and possibly of the century. The act was formed in such a way so as to ensure the safety of the investors and kept the best interests of the industries. Despite the thoughts behind the law, it is widely hated by the industry as it has prohibited them from performing various and diverse functionalities and they have been explained in the Sarbanes Oxley act summary.
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