Analysis of cost and benefit of Sarbanes-Oxley Act Section 404

ANALYSIS OF COST AND BENEFIT OF SARBANES-OXLEY ACT SECTION

404

Cost and Benefit of Sarbanes-Oxley Act

TABLE OF CONTENTS

ABSTRACT

CHAPTER 1

INTRODUCTION . 3 Context of the Problem

Statement of the Problem

Specific Research Question and Sub-questions to Address the Problem

Significance of the Study

Research Design and Methodology

Organization of the Study

Tentative Reference List

CHAPTER 2

LITREATURE REVIEW 7

Survey Result

Corporate Scandal , Main Cause of the Act

What CFOs are Saying about the Act

Areas Where

There Was Significant Change

Summary CHAPTER 3

ANALYSIS . 12

SECTION 404 HAS LIMITATIONS . 12

Control in a Corporate Setup

Planning

Management Process

Risk Taking

Decision Making Process

Relationship of Risk and Information

Operations and Risks

Required Compliance and Risk

Summary

CHAPTER 4

THE COSTS AND BENEFITS OF SARBANES-OXLEY SECTION 404 . 24

The Role of Auditors in the New Setup

The Role of Board of Directors

Justifying the Involved Cost

Summary

CHAPTER 5

WHAT OPPONNENTS HAVE TO SAY . 29

The Act Is Not Necessary

Disposition of Assets

Irrecoverable Costs Related to the Act

The Confidence of Investors

Risk Taking Capability of Corporations Eroded

Deficient Accounting System

Summary

CHAPTER 6

WHAT THE PROPONNENTS ARE SAYING 36

The Act Is Necessary

Damages Defied

Benefit Outweighs According to Proponents

Erosion of Capital Market Averted

Computers and the New Control System

Summary

CHAPTER 7

SUMMING UP THE FINDINGS . 44

Introduction . 44

Summary 46

The Dispute is the Cost

Cumbersome Decision Making Process

The Challenge of Knowledge Based Companies

Conclusion 51

ABSTRACT

What took place at the beginning of 2000 when a handful of officials were indicted for defrauding the publicly owned companies they were running , the incidents had shocked many people that included , investors observers , as well as government officials who went out to correct the wrongs , at least by making sure it will not be repeated . The court system had found those involved guilty after deliberating and some of them were sent to prison to serve time . Among the major events that came to the fore that caught the public off guard was the introduction of a Bill by two members of Congress that was eventually approved to become a law bearing their name and came to be known as Sarbanes-Oxley Act of 2002

The Act had propionates and opponents from its inception through its unanimous approval by Congress to become a law who have different opinions about what it will do to the American corporate world . Among the issues raised , the cost and benefit of the Act to the business world had been the most controversial one , simply because most people have found the implementation of the Act very costly and could do damage to the American corporate world . This research analyzes the findings of various researches and surveys to arrive at a conclusion by highlighting what the stand of the majority of the people is that includes those who are responsible for the coming into existence of the Act , as well as those who are required to implement it

INTRODUCTION

Context of...