Sarbanes- Oxley Act

Running head : Sarbanes- Oxley Act

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Sarbanes- Oxley Act

The Sarbanes- Oxley Act is meant to mitigate unethical financial accounting practices by corporate auditing firms . This serves the importance of enhancing the reliability and accuracy of financial statements given by companies . To achieve this , Sarbanes- Oxley Act dictates for CEOs and CFOs of firms to take full responsibility of their financial statements (Holt , 2006 . The Act requires chief executive officers to sign the tax returns of the organization . Another significant role of

the Act is its provision for mitigating conflict of interest by auditors (Holt , 2006 . According section 201 of the Act auditors are prohibited from providing lucrative consulting services to the firms they audit . Prior , to the enactment of the Sarbanes- Oxley Act , auditors enjoyed consulting services with corporations , a factor that compromised their ability to report unethical financial practices by the companies . Based on the provisions of Title V of the Act , a code of conduct for security analysts is defined as well as dictating for mandatory disclosure of any identified conflict of interest by the analysts (Holt , 2006

In addition , the Act serves an important role in providing for independence of auditing firms . This is founded on the establishment of a Public Company Accounting Oversight Board which functions to register and supervise auditors . To ensure the integrity of the financial reporting process , under Title VIII , the law provides for criminal penalties to those involved in manipulating financial records (Plette Fletcher , 2008 . It is...