The Impact of Sarbane-Oxley on Community Bank Governance.

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The Impact of the Sarbanes-Oxley Act on Community Bank Governance

Introduction

This aims to discuss the Sarbanes-Oxley Act and the impact that it has had , and will continue to have on the financial industry , in particular the field of community bank governance . In for the to successfully do this , a definition of the Sarbanes-Oxley Act and of governance , both good and bad , is necessary . It is also necessary to look at what position community bank governance found itself in before the passing of the Sarbanes-Oxley

Act and the position it is in after the passing of the Sarbanes-Oxley Act to assess the changes and impacts that it has had

For the purposes of supplying additional and supporting information this also gives a general discussion of the Sarbanes-Oxley Act the background and history of it , and the impact the passing of it has had on corporate governance in general , because I believe that it is important to understand this aspect of it in to understand the full importance , relevance and implications of the impact of the Sarbanes-Oxley Act on community bank governance . The Act has had a profound impact both on community bank governance as a whole and on suppliers to the bank as well as individual staff members employed by the bank , and indirectly the customers of the bank

What is the Sarbanes-Oxley Act

In to correctly define the Act , let 's read what John T Bostelman author of The Sarbanes-Oxley Deskbook (2003 , 2004 , has to say . He explains it clearly and concisely in the following manner

The Sarbanes-Oxley Act gives new legal rights to employees of public companies who claim that they were retaliated against for providing information , assisting an investigation , or participating in a proceeding concerning alleged violations of US Federal securities or anti-fraud laws

In other words , the Sarbanes-Oxley Act provides protection to employees of public companies and minimizes the risk that they are going to be discriminated against after trying to hold up United States Federal securities or anti-fraud laws

The Act was passed on June 30 2002 (Miller and Jentz , 2004 ) after a number of high pro scandals such as the much publicized Enron scandal (to explain this briefly , there were rumors of mismanagement and fraud in the company , and subsequently the Houston based energy company collapsed , bringing shame for the accounting firm with which it was associated , Arthur Anderson and unleashing scandal for large companies in just about every sector of the New Economy ' - Axelrod and Phillips , 2004

Named after its architects , Representative Michael Oxley and Senator Sarbanes the Sarbanes-Oxley Act has had a large and important impact on many related aspects of finance including auditing and the revolution of risk management . It has in fact been one of the sole factors responsible for the revolutionizing of corporate governance which has taken place in the last few years . This being the case we can see how important it is that we...