Sox Key Main Aspects for a Regulatory Environment Essay Example for Free

Sox Key Main Aspects for a Regulatory Environment EssaySarbanes-Oxley Act was passed in 2002 by creator president George Bush. Essentially to combat the Enron crisis. The Sox Act basically has regulatory control and creates an enviroment that is looking out for the globe. Ideally this regulatory environment protects the public from fraud at bottom messs. Understanding, that while having this regulatory control at times the Sox requirements need to be tweaked or amended. Not only now but in the future as well. The main aspects of the Sox act atomic number 18 essentially looking out for our welfare as a consumer. Our regimen has the obligation to regulate and facilitate any rules to oblige with a corporation to protect the American people.The Sarbanes-Oxley Act of 2002 came into its own in the summer of 2002. The act got its name from Senator Paul Sarbanes and Representative Michael Oxley. Essentially these two gentlemen were the establishment fathers of this act. They s et up the framework for compliance and regulatory controls. The Sox is formatted with 11 different titles, however for compliance regulations there are sextuplet important sections. These sections are 302,401,404,409,802, and 906. each(prenominal) one of these is the backbone of the Sarbanes-Oxley Act.One section in particular is a key component to hold corporations accountable that would be section 302 of the Sox act. Essentially qualification both the CEO and CFO sign off on all financial documents. This is huge for any company. The reason being it holds people accountable, which in any business is essential for its own sustainable success. If the CEO has to review every financial document and essentially is putting his career on the line and to bend a jail term. Each financial document is going to be scrutinized by him before he signs off of the financials.another(prenominal) important article of the six is section 401 of the Sox act. This act pertains to financial disclosers , and to make sure each one of these are accurate and has no mistakes or errors. Essentially everything needs to be attested and accounted for. Basically another check and balance to assure that the financials are done right and the people doing them are held accountable.Article 404 of the Sarbanes-Oxley act is another article that is a huge key in regulatory compliance. This article is defined as Assessment of Internal controls. Essentially making companies or corporations publish information around their controls and procedures for financial reporting.Article 409 is another key component to the Sox act. This article is defined by Real Time Issuer disclosures. Essentially a company or corporation is required to disclose portent financial information to the public if there is a sudden change to their financial condition or something within the operable realm. Also when this is disclosed it has to be done in layman terms for everyone to understand. Another key step in holding peopl e accountable and regulating companies or corporations.The one article that everyone result pay attention too is section 802. This is the criminal penalty section. This section is defined by Criminal Penalties for modify documents. Essentially stating that any destruction, falsifying or hiding and not disclosing any financial information is punishable by a 20-year prison sentence, fines and various penalties. Another step of accountability in relation to section 302 a CEO is subjected to these terms and does so willingly when he signs financial documents. Another check in the system is the accountant who is providing the CEO with these documents is also held accountable by a 10-year prison term. This is great for accountability within an organization.Now the question would be for the future can the Sarbanes-Oxley Act work? And what are the ramifications in a long-term projection? In some ways I feel this act could be sustainable in a long-term scope to keep companiesand corporatio ns in check. However I think this was created after the Enron situation and purely done because of that. Our government instead of being proactive was reactive and came up with this act for pure necessity and panic and public outcry. However even if thats the case, this did at least set a framework and accountability for companies and corporations. Going forward this has worked for at least 10 years or so, however it should ratified to more period times and situations.Clayton Brite tends to agree with me When looking back upon the first ten years of the Sarbanes-Oxley Act, one can only conclude that it has placed an undue burden our public companies and stifled our economic growth. The Acts costs have greatly outweighed its benefits and thus needs reformed. Its effects have been perhaps more pronounced by the current financial crisis and the slow economic recovery. It is my opinion that lawmakers felt the pressure to punish corporate Americans when they should have focused their at tention on trying to boil down information asymmetry. Sarbanes-Oxley was written and passed within one month in 2002.With the empirical evidence we have now in its first decade of existence, it is time to go back and reform Sarbanes-Oxley and ease some of the burdens it has placed on companies which fall under its punitive purview, (Brite, 2013). So essentially I feel this act is not going away. I like the act and the fact people are held accountable for their actions. I like the sign off by the CEO and how they are held accountable as well. I think in some respects the Sox at should be modified and possibly have harsher penalties applied to assure that Enron will never happen again. We shall see moving forwardReferencesAddison-Hewitt Associates. (2006). A Guide To The Sarbanes-Oxley Act. Retrieved from http//www.soxlaw.com/Investopedia ,(2014). Sarbanes-Oxley Act of 2002-SOX. Retrieved from http//www.investopedia.com/Rouse, Margret. (2007). Definition of Sarbanes-Oxley Act. Retrie ved from http//searchcio.techtarget.com/definition/Sarbanes-Oxley-ActBrite, Clayton. (2013). Is Sarbanes-Oxley A Failing Law? University of Chicago undergrad Law Review. Retrieved from http//uculr.com/articles/2013/6/30/is-sarbanes-oxley-a-failing-law