CONTENT:
SARBANES-OXLEY ACT OF 2002Student:Professor:Course title:Date: Introduction An increasing number of first time investors are now turning to the market for the purpose of securing their futures, finding school fees for their children, paying for their homes, meeting their daily needs and so on. This necessitates a more compelling role by the government to protect these investors and the public from fraud related activities within corporations. This concern was more apparent in the fiasco of Enron scandals, Tyco, Worldcom, Global crossing, Adelphia and others who were or have been found to practice massive fraudulent operations in their business. In an attempt to curb such fraudulent activities incorporations, the US federal government has enacted scores of particular fraud prevention and protection acts. Some of these acts enacted recently at the federal level include the 2007 tax fraud prevention act, the 2008 Foreclosure Rescue Fraud Prevention act. At the state level, many other acts have been enacted by the respective state governments for their specific jurisdictions. The Sarbanes--Oxley Act, also known as the SOX or the SarBox is the most modern and significant fraud prevention act in the history of America. This act was meant to put in place novel anti-fraud standards and measures for the boards of publicly listed organizations, management concerns and accounting firms in US. The act which acquired its name from its sponsor in congress, Paul Sarbanes, a U.S senator requires the board of directors in the publicly listed organizations to take on extra oversight obligations, requirement for enhanced disclosure, assigning of increased criminal penalties for offenders in fraudulent activities, and also limiting individual control. This paper evaluates whether the Sarbanes--Oxley Act has been effective in the protection of the public from fraud. Discussion (Arguments)SOX has not been Effective Owing to the much talk concerning the Scandals of Enron, Tyco, WorldCom and others, it would appear natural for organizations to work hard and be more careful in preventing fraud in their organizations. According to the views of some, the SOX has assisted very little with regard to fraud prevention. Although the Sarbanes-Oxley act is perceived by many to be the answer on fraud activities in corporations, there are those whose perceptions on its efficacy have been different. For some of these people, the impact of SOX on fraud has not been measurable. For instance, according to Childress, (2008) the expansive rules and regulations in the SOX have only resulted into organizations having to undertake expensive paperwork. These companies are now expected to keep many documents and files with regard to what is done by the company and how it does concerning its operations and financial data. Childress argues “it is not a large or extensive documentation that could prevent fraud activities”; rather it i...
