External auditors are prohibited to Sarbanes oxley acct301 essay the under noted acts in relation to their audit clients, presumably to keep intact the attribute of independence of auditors: Also, members of audit committee must be independent of management of the company.
The board is entrusted with powers to inspect the conduct of accounting firms with regard to standards set by the board.
The objective is that members of audit committee must be technically capable to control and analyze the activities of auditors. In a way independence of auditors is being redefined by authorities other professional bodies controlling auditors. Compliance a costly affair For foreign companies compliance with the provisions of Sarbanes Oxley Act is a costly affair.
That means no one from the management of the company can serve as member of the audit committee. Services other than audit provided by the auditors to the company with approval of audit committee have to be disclosed while reporting to SEC.
The major issues that are controlled under the act and affect the companies directly are discussed and detailed as under: This is merely a shifting of responsibilities.
Surprisingly such an important group does not find a place in audit committee. Companies in other countries put an argument that as US laws have lost faith in accountancy profession, they are passing the buck to CEOs to reconfirm the accuracy of financial statements. Financial expert must have experience in preparing, analyzing, and evaluation of financial statements.
Further, companies must also disclose all rapid and current basis material changes in their financial conditions and financial operations. Also any disagreements of auditors with such accounting policies and procedures followed by management should also be brought to the fore of audit committees.
All accounting firms that provide external audit to publicly traded companies have to get registered with PCAOB.
Also the board can conduct investigations for possible violations of SOX regulations; and may impose sanctions on accounting firms. This is really unacceptable to them as it is not necessary that all CEOs are accountancy experts themselves.
For a long time foreign companies would come to the United States for the prestige of being listed and of being able to claim that they had been able to meet the highest disclosure standard in the world. The important thing is that one of the members of audit committee must be a financial expert.
A statement as to whether the internal control system is effective as of year end.
There is a sort of exodus of foreign companies.Effects of Sarbanes – Oxley Act Essay Sample. With the enactment of Sarbanes – Oxley Act incorporations including foreign corporations and the external auditors have mostly been affected and burdened with newly found responsibilities under the act.
Essay on Sarbanes-Oxley Act of Sarbanes-Oxley Act of Week # 2 Individual Assignment Sox Key Main Aspects for a Regulatory Environment Sarbanes-Oxley Act was passed in by former president George Bush.
The Sarbanes-Oxley Act was passed in by Congress after a series of scandals involving companies such as Enron, WorldCom, and Tyco.
This was passed because of shady transactions and misrepresented financial data which caused shareholders to lose millions of dollars and their trust in investing in public companies.
- H.R - The Sarbanes-Oxley Act of A lot has been made, perhaps without justification, of the July 30, passage of H.R.The Sarbanes-Oxley Act of. Sarbanes-Oxley Act Introduction The Sarbanes-Oxley Act was signed into law on July 30,by President George W.
Bush; it was a congressional regulatory response to the enormously damaging corporate scandals at WorldCom, the Arthur Anderson accounting group and most notoriously, Enron.
The Sarbanes – Oxley is a regulatory act “passed by Congress in in response to a series of massive corporate frauds (i.e., Enron, WorldCom)” (University of Phoenix,p. 3). When Congress passed the Sarbanes-Oley Act, it was “to provide greater protections to investors, creditors, and other stakeholders” (University of .Download