08/12/21 MMS- Marketing Sem IV 1

Contents
I. Introduction to the Sarbanes-Oxley Act
II. What is SOX?
III. Why was SOX formed?
IV. Pre existing Conditions
V. Enron
VI. Goals of SOX
VII. Titles of SOX
VIII.Bibliography

08/12/21 MMS- Marketing Sem IV 2

 It is named after sponsors U.S. Senator Paul Sarbanes (D-
MD) and U.S. Representative Michael G. Oxley (R-OH).

08/12/21 MMS- Marketing Sem IV 3

Also known as….
'Public Company Accounting Reform and Investor
Protection Act' (in the Senate)

'Corporate and Auditing Accountability and

Responsibility Act' (in the house)

 Sarbox or SOX

08/12/21 MMS- Marketing Sem IV 4

What is it??
Sarbanes-Oxley (SOX) is a US law passed on 30th July
2002 to strengthen corporate governance and restore
investor confidence.
It applies to all those companies that are registered with
the SEC and file reports under
Sec 15(d) or have filed for a registration with the SEC.
It does not apply to privately held companies

08/12/21 MMS- Marketing Sem IV 5

Why was it formed?
Sarbanes-Oxley law was passed in response to a number
of major corporate and accounting
scandals involving prominent companies in the US e.g.
Enron, Tyco etc.
These scandals resulted in a loss of public trust in
accounting and reporting practices.

08/12/21 MMS- Marketing Sem IV 6

Pre existing conditions…
1. Auditors Conflict of Interest
2. Boardroom Failures
3. Securities Analysts Conflict of Interest
4. Inadequate Funding of SEC
5. Banking Practices
6. Internet Bubble
7. Executive Compensation

08/12/21 MMS- Marketing Sem IV 7

Learning from past mistakes…
ENRON :
Asset stripping
Over Diversification into various fields
Fudging of books
Arthur Anderson – hand in gloves
ESOP

08/12/21 MMS- Marketing Sem IV 8

Goals of SOX
Regain public confidence in markets

Improve corporate governance

Increase executive accountability

Increase efforts to prevent, detect, investigate and

remediate fraud and misconduct

08/12/21 MMS- Marketing Sem IV 9

11 Titles
1. Public Company Accounting Oversight Board (PCAOB)
2. Auditor Independence
3. Corporate Responsibility
4. Enhanced Financial Disclosures
5. Analyst Conflict of Interest
6. Commission Resources & Authority
7. Studies and Reports

08/12/21 MMS- Marketing Sem IV 10

11 Titles
8. Corporate and Criminal Fraud Accountability
9. White Collar Crime Penalty Enhancement
10. Corporate Tax Returns
11. Corporate Fraud Accountability

08/12/21 MMS- Marketing Sem IV 11

08/12/21 MMS- Marketing Sem IV 12
Bibliography
http://en.wikipedia.org/wiki/Sarbanes%E2%80%93Oxley
_Act
http://www.valuenotes.com/krc/krc_weekender_07may05
.pdf?ArtCd=35050&Cat=L&Id=11

08/12/21 MMS- Marketing Sem IV 13

08/12/21 MMS- Marketing Sem IV 14