Are we doing enough to see that another Enron doesn`t happen? Is Sarbanes Oxley effective?

Almost There , Striking a Balance for Success

The Efficiency Sarbanes-Oxley Act

By

Name

MGT 6600 Advanced Concepts s of Management

Troy University

Term Number , Year

Dr . Diane Prince

Date

INTRODUCTION

Corporate America had been beaten down by corruption and scandal that resulted to very strict legislation in the form of the Sarbanes-Oxley (Sarbox ) Act . During the time that this act was passed it seemed like it was the next thing that the government should do because of stories that stormed the new about suspicious accounting practices and

unethical business moves (Longnecker 2004 . During this time , the newss were dominated with headline stories about Enron and exposures of the corporate wrongdoings and scandals about elite global companies (Longnecker 2004

The passage of the act was almost left unnoticed because it was buried under the headlines of the scandals mentioned . It even seemed as if the Congress was pressured to pass the act to restore the confidence of the confidence of foreign and local investors in the integrity of the public markets of America (Manzi 2007 . Requirements over requirements on public companies to prevent fraud and other strategies that would cover up suspicious amounts of assets those companies feel the need to protect (Manzi 2007 . Politicians felt the need to target everything that was wrong with corporate America all at once that regulations were rushed (Manzi 2007 . As a result , the Sarbanes-Oxley Act was not inspected closely to provide better contingency for the loopholes of this act Although larger companies still see that the act would reap major benefits despite of the rigid requirements of the implementation , a major part of the small public companies feel the struggle to cope up with the provisions of the Act (Harrington 2005

MEET THE SARBANES-OXLEY ACT

Background

The passage of the Sarbanes- Oxley Act was on July 30 , 2002 . It was only a number of months at the peak of the Enron scandal (Romano 2005 The House Financial Services Committee had seven hearings about Enron and out of that a legislation was proposed (Romano 2005 . The collapse of WorldCom in July 2002 pushed Senate to seriously consider the legislation (Romano 2005 . During the time that the legislation was still in the House of Representatives , only on of the present corporate governance was included with Sarbox , which was the restriction of non-audit services by auditors (Romano 2005 . When it went up to the senate , the restriction widened its reach and implemented a stricter restriction on non-audit services (Romano 2005 . Politics involved in the changing of the bill was because the House was dominated by Republicans and the Senate was controlled by Democrats , the Senate Democrats changed the bill with their own bill when it was brought to the Senate floor (Romano 2005

Corporate scandals in the case of Enron , Adelphia Communications , Global Crossing , Tyco International and WorldCom paved the way to expose accounting fraud that led the corporations to their bankruptcy (Romano 2005 . During this time , the stock market was also suffering a decline This lead...