How Sarbannes-Oxley Act affects internal controls

Running Head : SARBANNES-OXLEY ACT

How Sarbannes-Oxley Act affects internal controls

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Introduction

Sarbanes-Oxley Act which is also referred to as the public company accounting reform and investor protection act is a wider legislation passed in 2002 . The SOX act has provisions touching on the standards for all the United States public firms ' boards , management as well as the public accounting companies . Sarbanes-Oxley Act has been considered one of most important legislation to the America 's security laws probably since the New Deal

of passed in 1930s . According to Moeller (2008 ) it has eleven sections that clearly spell out the standards it oversees The provisions of this law implies that American companies as well as those with the united states listings have a legal obligation to show that they have efficient and effective mechanisms of both internal control and financial reporting . The main objective of the Act is to enhance both transparency and financial reporting disclosures that would stifle any form of corporate or financial fraud . The SOX also enforces the responsibility of the senior officers in ensuring accuracy as well as honesty in the disclosure of financial outcomes (Porter Norton 2007

The Sarbanes-Oxley act of 2002 , in sections 302 and 404 have some tough provisions regarding the internal controls . Section 302 for example calls for certification of all information relayed to the public or market as correct . This section also requires evaluation of the disclosure controls (that is having full control of all information issued to...