What accounting issues does the Sarbanes-Oxley Act of 2002 address?

Question

What accounting issues does the Sarbanes-Oxley Act of 2002 address?

Answer 1

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The Sarbanes-Oxley Act (SOX) was triggered by the bankruptcies and alleged audit failures involving such companies as Enron and WorldCom.

Before SOX, the Auditing Standards Board (ASB) of the AICPA established auditing standards for private and public companies. The PCAOB, which is appointed and overseen by the SEC, now has responsibility for auditing standards for public companies. The ASB continues to oversee private companies.

An issue that SOX addresses is additional regulation for public companies and their auditors. Auditors are required to attest to management reports on the effectiveness of internal control over financial reporting under Section 404. The Act particularly addressed and changed the relationship between publicly help companies and their audit firms.

Auditor independence was another key issue of the Act.

The titles of the Act are:

TITLE I. PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD

TITLE II—AUDITOR INDEPENDENCE

TITLE III—CORPORATE RESPONSIBILITY

TITLE IV—ENHANCED FINANCIAL DISCLOSURES

TITLE V—ANALYST CONFLICTS OF INTEREST

TITLE VI—COMMISSION RESOURCES AND AUTHORITY

TITLE VII—STUDIES AND REPORTS

TITLE VIII—CORPORATE AND CRIMINAL FRAUD ACCOUNTABILITY

TITLE IX—WHITE-COLLAR CRIME PENALTY ENHANCEMENTS

TITLE X—CORPORATE TAX RETURNS

TITLE XI—CORPORATE FRAUD AND ACCOUNTABILITY

Here is a link to the legislation

http://www.pcaobus.org/About_the_PCAOB/Sarbanes_Ox...

Source(s): B.S. in Accounting

Answer 2

As far as I know, to put it in simple (if not the simplest terms), the Act means to say that companies should keep copies of all correspondences, of all types, especiall emails or faxes. If the company gets involved in a case, and the court asks for correspondences, and they find out that the company has deleted even just one email, it's a count against the Act.