federal legislation that affects the business Module 14 - Course Research Paper
ID: 342739 • Letter: F
Question
federal legislation that affects the business
Module 14 - Course Research Paper Due Friday by 11.5opm Points 100 Submitting a File Types doc, docx, and pat Available Feb 5 at 12am a file uploed For this assignment, you need to select a piece of tedera be any legiala environment as the topic for your research some examples to consider might include: eral le t can be any dion that a 1) Sarbanes-Oxley Act of 2002 2) Fair Labor Standards Act of 1938, as amended 3) Lily Ledbetter Fair Pay Act of 2009 4) Occupational Safety and Health Act of 1970 5) The Affordable Care Act of 2010 6) The Credit Card Accountability, Responsiblity and Disc Disclosure Act of 2009 Your paper should discuss the following: or provisions of the legislation and why did you select it a as of busines 1) What are the main points interest? 2) What conditions led to the passage of the legislation? 3) What are the implications of this legislation for business, (ie. whtar 4) How did the legislation affect consumers or mployees or 5) In your opinion, most affected by the legGeslation or will be nidst affected and how se legislation? not? how is t projected to has the legislation been sucesful or do you think that it wil be s in length. bet ineluding the reference sectios legislation The research paper should be 4-6 pagond should incilude use of at least five sources typed in 12 point font, double spaced, auid include a reference section that properly books, websites, etc.). Your paper sho resource so the instructor can find it. is The project will be graded on the following bas On Time- 10 points Spelling, Grammar, Correct Format - 25 points Response to Question 1-10 points Response to Question 20 points Response to Question 3- 10 points Response to Question 4-10 points ect citations- 15 points Reference Section-Five resources with corr Total 100 points Response to Question 5 -10 pointsExplanation / Answer
The paper is on Sarbanes Oxley Act of 2002:
Introduction:
Financial regulatory is very critical for an organization, especially the public limited companies. It is on this basis that the Sarbanes-Oxley Act (SOX) was enacted in the year 2002 in U.S. Several factors led to the research and actual enactment of SOX. This was necessitated by several scandals in various companies, related to accounting principles and practices. Such companies, included Adelphia, Enron, and Global crossing.
The current essay examines the correlation between SOX and business operations in U.S as well as the governance principles of regulatory compliance requirement related to SOX.
Sarbanes-Oxley 2002 correlation with U.S. Business operations:
In 2015 Andiry had reported that after the real enactment of SOX in 2002 there was a significant and substantial restoration of investor’s condifence towards public accounting. Investor confidence was redeemed as SOX led to strengthening of audit committees in the corporate sector. Directors were made responsible for accuracy of the financial statements and internal controls of companies were augmented.
In addition, SOX made punishment tougher for securities fraudsters, wire fraudsters as well as mail fraud. Punishment made for such fraudsters were raised, up to 25years imprisonment for securities fraud while mail and wire fraud was raised from five years to 20 years. This was meant to deter the crimes in securities. The end result was to promote fair business practices. The public companies that committed securities fraud were fined heavily, upon enactment of SOX. From a broader perspective, SOX improved public governance in public companies. This was achieved through the establishment of external auditors. Public company accounting oversight board was established, to oversee adherence to the established public accounting standards.
Governance principles of regulatory compliance requirements related to SOX:
According to Clark (2012), SOX required there be the existence of Securities and exchange commission, which would enforce strict adherence to the regulations established by SOX. The act would intensify financial reporting regulations as well as advance punishment to those who did not comply. The ultimate goal was to improve the investor's confidence, through enabling of accurate as well as reliable disclosures by the corporates.
Section 302 to 308 of the SOX, emphasized the importance of accurate financial reporting by the public companies. The company managers and chief executive officers were given the responsibility of ascertaining that, the financial statements did not contain any untrue statement. SOX stated that it would be unlawful for any corporate leader to deliberately or indeliberately give incorrect financial statements.
Also, SOX stipulated that there should be an effective audit committee for the public companies. For effective financial internal control, Audit committee was mandatory for every public company. The audit committee were tasked with several functions. These included funding, conducting an independent financial audit as well as monitoring complaints.
The role of the SEC and how Sarbanes-Oxley affected the Agency:
The risks of firm’s financial misstatement largely depend on the complexity of the firm's transactions (Bargeron, 2010). SEC provides guidance to the company’s compliance with section 404, which discusses the accuracy of financial statements as well as auditing process. However, their stance differs with SOX in regards to company responsibility to the financial misstatement. SOX made the operations of SEC be intertwined with those of the public board of accountants.
SOX had impacts on the operations of SEC. Under section 301, SOX required SEC to prohibit companies that have not yet complied with the audit recommendation of SOX from being listed on the securities exchange. SOX required that at least one member of the audit committee in the publicly traded company, be a financial expert. This was to be ascertained by the SEC before listing companies on the securities exchange, otherwise, they would be needed to disclose the reason for not having a financial expert on the panel.
In addition, SOX forced SEC to adopt companies with market capitalization policy. By this provision, SOX stipulated that SEC would ask all companies to be listed to disclose their adequacy in internal financial control. This came to effect in the year 2004. Companies were supposed to have a market capitalization of at least $75 Million. SEC was fully responsible for ensuring that companies complied with section 404 of the SOX 2002.
How Sarbanes-Oxley led to securities fraud strengthening and accounting reform:
Through whistleblowing, SOX helped raise alarm over continued fraud in the public companies. SOX established the public company accounting oversight board, which was tasked with the responsibility of auditor registration, defining audit process as well as ensuring compliance with statements of SOX (Sarbanes-Oxley, 2012). SOX also promoted auditor's independence as well as taking the management with the responsibility of ensuring financial statement were accurate. This led to reform in public accounting in the corporates.
SOX led to securities fraud strengthening, by using SEC as the key player in ensuring companies complied with auditing requirement as well as providing a proof of their market capitalization before they could be listed in securities exchange. The introduction of harsher punishment for securities fraud led to strict adherence to set guidelines in the securities exchange.
Conclusion:
Accurate financial statements are key to investor confidence in any given public company. Fraud in securities can easily be managed through the introduction of strict procedures before a company is listed. SOX played a major role in raising alarm over widespread fraud in the corporates as well as in resolving the financial reporting crisis. The ultimate goal of SOX was to instill investor confidence and promote effective and efficient public financial accounting.
References
Andriy, B. (2015). What impact did the Sarbanes-Oxley Act have on corporate governance in the United States? Journal of management, 3-10.
Bargeron, L. L. (2010). Sarbanes-Oxley and corporate risk-taking. . Journal of Accounting and Economics, 34-52.
Clark, K. (2012). The Effects of Sarbanes Oxley on Current Financial Reporting Standards. The effects of SOX, masters thesis, 4-15.
Sarbanes-Oxley, A. G. (2012). The Sarbanes-Oxley Act. . Via www. soxlaw. com , 26.
Green, S. (2004). A look at the causes, impact and future of the Sarbanes-Oxley Act. Retrieved from https://scholarlycommons.law.hofstra.edu/cgi/viewcontent.cgi?article=1024&context=jibl
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