The Importance And The Use Of Sarbanes Oxley 2002 Act Sarbanes Oxley Regulation.
The Sarbanes-Oxley Act of 2002:Pub. L. No. 107-204, 116 Stat. 745 is a phenomenal act which is making provision for the accountability of private companies which tend to practice sham trade practices which tend to harm the general public and the government who are duped by white collar frauds. In order to stop this malpractice of private sector, the Sarbanes-Oxley Act came up with Sarbanes Oxley regulation which gave power to government in establishing the Public Company Accounting Oversight Board (PCAOB) and Securities and Exchange Commission (SEC) which will look into all the financial deals and auditing report of the company by making inspections and reviewing their financial policies.
Under this act, the government will provide the accounting agency with the auditors who will look into the trade policies of the companies in an unbiased nature and if any discrepancy is found in the record of the company and its annual budget report than the company is liable for law enforcement which includes fines and punishment on the part of the government.
Under the Sarbanes Oxley regulation, the Public Company Accounting Oversight Board (PCAOB) and Securities and Exchange Commission (SEC) which looks in the internal policies of the company board members, their full time availability and ability to handle the organization with competence. This government agency is also responsible in appointing the Board of Directors and Chairperson of the company who are registered with the government.
The responsibility of the oversight board is to facilitate the business of the organization by getting the public accounting firm registered with the government, using ethical means of preparing the audit reports of the company with full responsibility in order to maintain a stringent check on the quality. Ii can also inspect the company records and related financial resources at any time and if any discrepancy is found in the policy of the business house, the board has all the powers to use any legal action on the company. Earlier, the function which was carried by the Auditing Standards Board (ASB) such as quality control, auditing and its attestation in order to assign and review of the company; now with Sarbanes Oxley regulation this right is carried by the Public Company Accounting Oversight Board (PCAOB) who will look into the internal matters of the company in order to review its policies and trade practices which will decide the creditworthiness of the company in the eyes of the public. Sarbanes Oxley regulation enables the governing board to keep check in the malpractices which are stealthily carried out by companies such as employing an accountant who can modify the accounts as per the will of his employer. Under the regulation report, the oversight board will provide with a neutral accounting body which will review the annual repot of the company. These public accounting firms will be accountable to the PCAOB. If the board finds any discrepancy with the records of the company, and then it can issue it with document retention or criminal provisions as per the gravity of the fault. Thus, Sarbanes Oxley regulation provides with all the necessary provisions in order to make the private company more accountable to the public as well as to the government.
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