Sarbanes-Oxley Act Essay Example | Topics and Well Written Essays - 1000 words

Sarbanes-Oxley Act - Essay ExampleSarbanes-Oxley Act The Sarbanes-Oxley Act is deemed to be quite an strong in protecting the investors and enhancing the factor of accurateness and reliability in various corporal financial activities. It has further been note that the act mainly aims at enhancing the above mentioned facets in a constant basis with the implementation of severe laws and rules for audit committees of commonplace companies, binding explanation professionals functions under the stated regimes (Rolf, 2005). Effectiveness of Sarbanes-Oxley Act in Minimizing collective Fraud and Protecting Investors The Sarbanes-Oxley Act, with its strict supervision encourages companies to adopt stern control system on their running(a) activities, which are expected to minimise the crime rates relating to investor fraud within the organisation. The effectiveness of the Sarbanes-Oxley Act preempt be exemplified from the fact that it has been able to develop various new legal enfor cements with regard to deal with merged fraud and ensure punitive measures for the wrongdoers within any business. Additionally, the effectiveness of the act bathroom too be justified from the fact that it not only punishes the companies that are involved in fraud but also the participants who initiates the same and therefore, assists in maintaining an all-inclusive framework to prevent accounting fallacies (Rolf, 2005 Ernst & Young, n.d.). Suggestions for Improvement. The act aims to take continuous plunges in developing its strategies and creating provisions that can restrain companies and accounting professionals from conducting corporate fraud, taking its learning outcomes from the classic misadventure case of Enron scandal. However, like any other act or legal provision, Sarbanes-Oxley Act also has the ground for further improvement, so that it can enhance its effectiveness to the next level. Suggestively, the act needs to include certain(p) penalties that would be efficie nt to target low level frauds. Currently, the charged penalty structure of the act can be regarded as quite severe for any kind of fraud in the context of corporate governance. Impact of the Formation of PCAOB on Auditing Firms and the universal Accounting Professions It is apparent from the above discussion that Sarbanes-Oxley Act is quite effective in dealing with the increasing cases related to corporate fraud. In strengthening its position as an effective legal provision aimed towards reducing corporate frauds, the Sarbanes-Oxley Act as used to form the Public Company Accounting Oversight Board (PCAOB). The PCAOB is a non-profit organisation that deals with protecting the interests of the investors by promoting the accuracy in accounting reports as well as emphasising independence of professionals in developing audit reports. Apparently, aimed towards binding accounting professionals, the initiation of this regime has imposed certain impacts on auditing firms and the public acc ounting professions, the most affected aspect being auditor independence. In the aftermath its enactment, the staff of PCAOB are in constant supervision of auditing firms and the public accounting professionals likewise, in order to identify any kind of violation of applied laws and professional standards in developing financial reports. In this regard, some of the rights of the authority include their power to impose