The Sarbanes-Oxley Act (SOX)

            This paper debates one of the most important current subjects in accounting and controls field: The Sarbanes-Oxley Act (SOX). It was approved by the Congress after company gossips in which businesses after giving deceitful financial reporting that indicated they were more financially sound than they actually were, went bankrupt. Representative Michael Oxley and Senator Paul Sarbanes suggested the Act to make stronger company accountability and governance, and avoid this kind of fraud. The Act was proposed to defend investors by demanding internal accounting checks and balances surrounded by a company and guarantee accurate financial reporting. The Act was signed into law by President Bush on July 30, 2002. Sarbox comprehends multiple titles, eleven in total. A brief description of the sub-sections of the act is provided below:.
             1. Public Company Accounting Oversight Board (PCAOB).
             The Public Company Accounting Oversight Board (PCAOB) was established as a result of the passage of the act, to ensure that interests of the investors in public companies are secured, and the audit reports are developed and represent true and fair opinion on the affairs of the company.
             2. Auditor Independence.
             The 'independence' of the auditor is critical for performing any audit related activity for any client. ISACA (Information Systems Audit and Controls Association) (2004) requires auditors to be independent of the audited in both attitude and appearance (professional independence) and the entire audit function to be independent of the area or activity being reviewed to permit objective completion of the audit assignment. The act requires the auditors to be independent. The law states that auditors should not have any operational and/or decision making role for the activity which they are auditing. .
             3. Corporate Responsibility.
             The act requires public companies to certify in their financial reports that a senior manager has evaluated the report and that the report does not have material misstatements.