Running head: SARBANES-OXLEY ACT

Sarbanes Oxley Act LAW 421

SARBANES-OXLEY ACT

Sarbanes-Oxley Act The Sarbanes-Oxley Act of 2002 involves all extensive trade in the United States. Corporations are to sustain an acceptable procedure of internal control, and the executives boards of directors are to make sure all internal controls are dependable and valuable. In todays society accountants encounter situations in which lead them down the wrong path, straight into unethical accounting dilemmas which no one sees coming until it was too late. Yet the most common reason for unethical behavior is self-interest and greed. The Sarbanes-Oxley Act mandates that some of the best practices are put in, in order to ensure that companies fully provide accurate disclosure in all periodic company reports and financial statements. Function of SOX In believing in the Sarbanes-Oxley Act is one big headache, while others believe that with or without the Sarbanes-Oxley Act a majority of companies could would and or are currently easily reverting to unethical accounting practices. This is due to lack of diligence or greed which in turn can and will ruin the reputation of the company, even though the SOX was passed to achieve a specific goal, it is to make companies and employees aware and behave ethically. There are continued arguments in regards to the execution requirements, for instance; they are costly, it is time consuming, and ineffective. In regards to financial statement, according to the Sarbanes-Oxley Act it is against the law to pressure, intimidate, control, or deceive a qualified self-determining accountant into falsifying company financial statements in order to mislead the public or investors into thinking a company is financial sound when it is not. Companies can no longer remove assets and debt offbalance sheet to make their overall financial position look better than it actually is in order to

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entice investors. Companies are now calling for the disclosing of off-balance sheet items by law, to provide a SEC study and a report clarifying the extent of usage, and whether accounting principles adequately address these methods. Criminal Penalties This law was passed to protect investors, employees, and the reputation of businesses and yet from what I read, see, and hear this law is failing to do the job. According to Sarbanes Oxley Act Section 802, CRIMINAL PENALTIES FOR ALTERING DOCUMENTS. (A) IN GENERAL- Chapter 73 of title 18, United States Code, is amended by adding at the end the following: `Sec. 1519. Destruction, alteration, or falsification of records in Federal investigations and bankruptcy. `Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both. `Sec.1520. Destruction of corporate audit records `(b) Whoever knowingly and willfully violates subsection (a)(1), or any rule or regulation promulgated by the Securities and Exchange Commission under subsection (a)(2), shall be fined under this title, imprisoned not more than 10 years, or both (2003-2012).

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Reference Hazels, B. (2010, November/December). Eight Years After The Fact Is SOX Working? A Look at The Brooke Corporation. Journal of Business Case Studies, 6(6), 19-29. Sarbanes-Oxley Era: Certified Public Account CPA Journal, 80(9), 64-67 (2003-2012).Sarbanes Oxley Act Section 802: Criminal Penalties for Altering Documents. Retrieved from http://www.sox-online.com/act_section_802.html