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Running head: SARBANES-OXLEY ACT 1
Sarbanes Oxley Act
LAW 421
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SARBANES-OXLEY ACT 2
Sarbanes-Oxley Act
The Sarbanes-Oxley Act of 2002 involves all extensive trade in the United States.
Corporations are to sustain an acceptable procedure of internal control, and the executives
boards of directors are to make sure all internal controls are dependable and valuable. In todays
society accountants encounter situations in which lead them down the wrong path, straight into
unethical accounting dilemmas which no one sees coming until it was too late. Yet the most
common reason for unethical behavior is self-interest and greed. The Sarbanes-Oxley Act
mandates that some of the best practices are put in, in order to ensure that companies fully
provide accurate disclosure in all periodic company reports and financial statements.
Function of SOX
In believing in the Sarbanes-Oxley Act is one big headache, while others believe that
with or without the Sarbanes-Oxley Act a majority of companies could would and or are
currently easily reverting to unethical accounting practices. This is due to lack of diligence or
greed which in turn can and will ruin the reputation of the company, even though the SOX was
passed to achieve a specific goal, it is to make companies and employees aware and behave
ethically. There are continued arguments in regards to the execution requirements, for instance;
they are costly, it is time consuming, and ineffective.
In regards to financial statement, according to the Sarbanes-Oxley Act it is against the
law to pressure, intimidate, control, or deceive a qualified self-determining accountant into
falsifying company financial statements in order to mislead the public or investors into thinking a
company is financial sound when it is not. Companies can no longer remove assets and debt off-
balance sheet to make their overall financial position look better than it actually is in order to
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SARBANES-OXLEY ACT 3
entice investors. Companies are now calling for the disclosing of off-balance sheet items by law,
to provide a SEC study and a report clarifying the extent of usage, and whether accounting
principles adequately address these methods.
Criminal Penalties
This law was passed to protect investors, employees, and the reputation of businesses and
yet from what I read, see, and hear this law is failing to do the job. According to Sarbanes Oxley
Act Section 802, CRIMINAL PENALTIES FOR ALTERING DOCUMENTS. (A) IN
GENERAL- Chapter 73 of title 18, United States Code, is amended by adding at the end the
following: `Sec. 1519. Destruction, alteration, or falsification of records in Federal investigations
and bankruptcy. `Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or
makes a false entry in any record, document, or tangible object with the intent to impede,
obstruct, or influence the investigation or proper administration of any matter within the
jurisdiction of any department or agency of the United States or any case filed under title 11, or
in relation to or contemplation of any such matter or case, shall be fined under this title,
imprisoned not more than 20 years, or both. `Sec.1520. Destruction of corporate audit records
`(b) Whoever knowingly and willfully violates subsection (a)(1), or any rule or regulation
promulgated by the Securities and Exchange Commission under subsection (a)(2), shall be fined
under this title, imprisoned not more than 10 years, or both (2003-2012).
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SARBANES-OXLEY ACT 4
Reference
Hazels, B. (2010, November/December). Eight Years After The Fact Is SOX Working? A Look
at The Brooke Corporation. Journal of Business Case Studies, 6(6), 19-29.
Sarbanes-Oxley Era: Certified Public Account CPA Journal, 80(9), 64-67
(2003-2012).Sarbanes Oxley Act Section 802: Criminal Penalties for Altering Documents.
Retrieved fromhttp://www.sox-online.com/act_section_802.html
http://www.sox-online.com/act_section_802.htmlhttp://www.sox-online.com/act_section_802.html