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Impact On Sarbanes-Oxley Business And Society Ib History Essay Help


Sarbanes-Oxley also allows participants of corporations art history essay help: art history essay help

fter conducting with a CFO and a CPA, Dr. Jasso learns that Sarbanes-Oxley has, from

a CFO perspective, promoted “a greater awareness and ownership of business process owners”

(2009, p. 10) and created “[a] talent pool with better business judgment, more informed decisions

to handle broader aspects of complexity” (2004, p. 10). Furthermore, from a CPA’s point of

view, the law has also “raised the bar for quality on audits – documentation has improved

noticeably” (Jasso, 2009, p. 11).

Additionally, Sarbanes-Oxley also allows participants of corporations to become good

corporate citizens. The law encourages and emphasizes the characteristics that corporations

should possess and exhibit. For example, to be considered as a good corporate citizen, every

corporation “should be concerned in part with how well a firm obeys relevant laws and

regulations” (Néron & Norman, 2008, p. 12). Sarbanes-Oxley accomplishes this goal by setting

severe penalties for violations of its compliance. Also, a corporation “should be concerned with

how well a firm contributes to (or does not detract from) the life of local communities through its

operations” (Néron & Norman, 2008, p. 14). In the case of Sarbanes-Oxley, it ensures that

corporations would not perform any unethical, dishonest, or immoral activities that would harm

the investors, or the general public. The act also encourages corporations to hold certain

10 economic virtues, such as the honest reporting of financial information, another key

characteristic to possess to display good corporate citizenship.

Sarbanes-Oxley Policy Analysis Summary ib history essay help

Policy Analysis

As a regulatory policy, Sarbanes-Oxley has been a very good because it attains its

primary goal, in terms of responding to and dealing with corporate frauds and scandals.

According to a nationwide survey on the impact of Sarbanes-Oxley, 79% of the 222 financial

executives claimed that their companies’ internal controls had clearly strengthened since

complying with Sarbanes-Oxley (Financial Executives, 2004, p. 1). The survey also revealed the

strengths of Sarbanes-Oxley and the benefits that corporations obtained from the law:

 “46 percent say SOX compliance ensures the accountability of individuals involved in

financial reports and operations

 33 percent say SOX compliance decreases the risk of financial fraud

 31 percent say they have reduced errors in their financial operations

 27 percent say SOX improvements in the accuracy of financial reports

 25 percent say SOX compliance empowers the board audit committee by providing it

with deeper information, and

 20 percent say SOX strengthens investors’ view of the company” (Financial Executives,

2004, p. 1).


The report “The Sarbanes-Oxley Act at 10” by Ernst & Young LLP states that “Sarbanes-Oxley

set a clear tone for corporate responsibility and helped restore investors’ confidence in financial

statements” (2012, p. 6). Overall, Sarbanes-Oxley has improved corporate governance, audit

quality, and investor protection.

One of the weaknesses of Sarbanes-Oxley is the fact that the compliance of the law is

quite costly and time consuming. In her article “The Impact of Sarbanes-Oxley,” Janet

Hartmann states that “[a] CFO Magazine survey indicated 48 percent of the respondents believed

implementation [of the law] would cost more than $500,000 and 35 percent believed annual

maintenance would be greater than $500,000” (2004, p. 25). Hartmann claims that the cost of

implementing the law would be too much for smaller businesses to handle. Also, Hartmann also

adds that most of the smaller companies are only attempting to reach the minimum requirements

set by the law due to the “lack of financial resources or technical expertise” (2004, p. 29).

Along with the compliance costs, confusion of compliance is also a problem when it

comes to Sarbanes-Oxley. Although Section 302 and 404, the major sections of the act, places

an enormous responsibility on corporations’ management about maintaining effective internal

controls over financial reporting, “no practical guidance is available to the registrants from the

SEC on how companies should grade their control deficiencies” (Gupta & Leech, 2005, p. 33).

Overall, it is appropriate and safe to conclude that Sarbanes-Oxley has been a success

simply because the benefits outweigh the costs. How the costs of Sarbanes-Oxley would

eventually be balanced out is shown here:

Because these costs are disproportionally born in the first year of compliance it is now

possible to spread out these costs over multiple pos-SOX years because it has been

12 proved that the positive effects have been persistent. This will result to lower average

costs of SOX which can take away some of the critique associated with the high

compliance costs (Verleun, Georgakopoulos, Sotiropoulos, & Vasileiou, 2011, p. 58).

A suggestion for improving the Sarbanes-Oxley history assignment help cheap: history assignment help cheap

A suggestion for improving the Sarbanes-Oxley is to shift a sensible level of focus from

“controls” to “risks.” In their article “Making Sarbanes-Oxley 404 work: Reducing cost,

increasing effectiveness,” Parveen P. Gupta and Tim Leech state that it is possible “that a client

may implicitly pay attention to the underlying risks but that is not as robust as testing the

effectiveness of controls by explicitly first focusing on the key risks, particularly the risks that

are already known to have caused major misstatements” (2005, p. 35). Moreover, placing too

much emphasis on controls and neglecting the presence of risks has resulted in high, unnecessary


Recommendation for future policy makers is that they should create a law that is

sustainable, meaning that the law would be effective in long-term. It is also recommended for

the law to build good corporate citizenship among corporations. Despite the fact that Sarbanes

Oxley already contains these features, it can still improve. Gupta and Leech have listed several

recommendations that would make Sarbanes-Oxley more cost-effective:

o Require that registrants and auditors focus on the acceptability of residual risk o External auditors should audit the process followed by the management to assess and

report on residual risk o Retain the requirement to develop and maintain risk and control documentation o Require companies to put in place a process to update risk and control documentation

quarterly o Provide flexibility to management in determining the level of control testing necessary to

support its internal control assessment conclusion o Provide guidance to management on how to assess and report on control effectiveness


o Provide guidance to registrants on how to report on control deficiencies and related

remediation actions (Gupta & Leech, 2005).

The Sarbanes-Oxley Act of 2002 Conclusion advanced higher history essay help


In conclusion, the Sarbanes-Oxley Act of 2002 accomplished, in an effective manner, its

primary goal of protecting investors from corporate scandals. Evidence has shown that the law

has definitely strengthened corporate governance and audit quality. Ultimately, Sarbanes-Oxley

was an effective remedy for market failure. Not only does the policy improve our business

through the restriction of dishonest disclosures and unethical practices, it also benefits the society

by developing good corporate citizenship in the process. The policy, like everything else, is not

perfect. Despite the fact that the compliance costs of the policy are quite costly, especially for

small companies, the costs would eventually balance out over the years. The costs of compliance

are something that can be fixed by ensuring an equal emphasis on the controls and the risks

aspects. In the end, the benefits and positive impacts of the policy completely outweigh the

costs. The sustainability of Sarbanes-Oxley is the key feature that future policy makers should

aim for when creating a policy.


H. R. 3763 One Hundred Seventh Congress of the United States of America

14 AT THE SECOND SESSION Begun and held at the City of Washington on Wednesday, the twenty-third day of January, two thousand and two An Act To protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) SHORT TITLE.—This Act may be cited as the ‘‘SarbanesOxley Act of 2002’’. (b) TABLE OF CONTENTS.—The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Definitions. Sec. 3. Commission rules and enforcement. TITLE I—PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD Sec. 101. Establishment; administrative provisions. Sec. 102. Registration with the Board. Sec. 103. Auditing, quality control, and independence standards and rules. Sec. 104. Inspections of registered public accounting firms. Sec. 105. Investigations and disciplinary proceedings. Sec. 106. Foreign public accounting firms. Sec. 107. Commission oversight of the Board. Sec. 108. Accounting standards. Sec. 109. Funding. TITLE II—AUDITOR INDEPENDENCE Sec. 201. Services outside the scope of practice of auditors. Sec. 202. Preapproval requirements. Sec. 203. Audit partner rotation. Sec. 204. Auditor reports to audit committees. Sec. 205. Conforming amendments. Sec. 206. Conflicts of interest. Sec. 207. Study of mandatory rotation of registered public accounting firms. Sec. 208. Commission authority. Sec. 209. Considerations by appropriate State regulatory authorities. TITLE III—CORPORATE RESPONSIBILITY Sec. 301. Public company audit committees. Sec. 302. Corporate responsibility for financial reports. Sec. 303. Improper influence on conduct of audits. Sec. 304. Forfeiture of certain bonuses and profits. Sec. 305. Officer and director bars and penalties. Sec. 306. Insider trades during pension fund blackout periods. Sec. 307. Rules of professional responsibility for attorneys. Sec. 308. Fair funds for investors. TITLE IV—ENHANCED FINANCIAL DISCLOSURES Sec. 401. Disclosures in periodic reports. Sec. 402. Enhanced conflict of interest provisions. Sec. 403. Disclosures of transactions involving management and principal stockholders. H. R. 3763—2 Sec. 404. Management assessment of internal controls. Sec. 405. Exemption. Sec. 406. Code of ethics for senior financial officers. Sec. 407. Disclosure of audit committee financial expert. Sec. 408. Enhanced review of periodic disclosures by issuers. Sec. 409. Real time issuer disclosures. TITLE V—ANALYST CONFLICTS OF INTEREST Sec. 501. Treatment of securities analysts by registered securities associations and national securities exchanges. TITLE VI—COMMISSION RESOURCES AND AUTHORITY Sec. 601. Authorization of appropriations. Sec. 602. Appearance and practice before the Commission. Sec. 603. Federal court authority to impose penny stock bars. Sec. 604. Qualifications of associated persons of brokers and dealers. TITLE VII—STUDIES AND REPORTS