The Impact of Sarbanes-Oxley Act of 2002 on Accounting and Finance Education(USE AS GUIDE ONLY)

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The Impact of 1
Running head: THE IMPACT OF SARBANES-OXLEY ACT OF 2002 ON
The Impact of Sarbanes-Oxley Act of 2002 on Accounting and Finance Education
ACCT 640
The Impact of 2
The Impact of Sarbanes-Oxley Act of 2002 on Accounting and Finance Education
INTRODUCTION
The collapse of prestigious US financial institutions in late 2001 has ushered in a
paradigm shift in financial accountability, and highlighted the ethical consequences of failure to
comply with the rule of law. As a consequence of this collapse, Congress passed the Sarbanes-
Oxley Act (SOX) in July 2002 to enhance corporate governance in an attempt to restore public
confidence. “The Sarbanes-Oxley Act has introduced significant changes in management's
reporting responsibilities and the scope and nature of the responsibilities of auditors.” President
Bush characterized the Act, as “the most far-reaching reform of American business practices
since the time of Franklin Delano Roosevelt.”(SEC 2006). One of the most important provisions
of the Sarbanes-Oxley Act is the establishment of the Public Company Accounting Oversight
Board (PCAOB), which prohibits the execution of certain non-audit services by auditors for their
audit clients by imposing greater criminal penalties for corporate fraud. PCAOB also demands
more detail and timely disclosure of financial information.
The Act contains two separate CEO/CFO certification requirements, the first contained in
Section 302 and the second in Section 906 of the Act. It also contains prohibition on loans and
credit to directors and executives, and is strong on ethical codes for senior management. There
are sections that cover forfeiture by CEO and CFO of certain bonuses and profits, prohibition of
improper influence on audits, trading restrictions, and prohibition of service as a director or
officer of a public company if he or she has violated the general anti-fraud provisions of the
securities laws. (Carver, B. T. 2003)

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Course: The Impact of Sarbanes-Oxley Act of 2002 on Accounting and Finance Education(USE AS GUIDE ONLY)
Subject: The Impact of Sarbanes-Oxley Act of 2002 on Accounting and Finance Education(USE AS GUIDE ONLY)
Subject code: The Impact of Sarbanes-Oxley Act of 2002 on Accounting and Finance Education(USE AS GUIDE ONLY)
Year of study: 17-18
Document
Section: Homework & Assignments
Made on: 27-01-2020
Type: .pdf
Pages: 13
Language: English
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The Impact of Sarbanes-Oxley Act of 2002 on Accounting and Finance Education(USE AS GUIDE ONLY)