Sarbanes Oxley Act of 2002 Essay Example for Free

Sarbanes Oxley get along of 2002 EssayDescriptions of the principal(prenominal) aspects of the regulatory environs which go forth protect the prevalent from fraud in spite of appearance corporations are going to be hand overd in this paper. A special attention to the Sarbanes Oxley venture of 2002 (SOX) requirement along with an evaluation of whether Sarbanes-Oxley Act will be effective in avoiding future frauds based on their utilise rules and regulations. The main aspects of the regulatory environment are based on the polar laws and regulations the different governmental institutions such as federal, adduce, and local real to create control over business practices. The regulatory environment creates a positive business monetary operational environment as well as efficiency in management, integration of capital take to the woods and domestic savings. For instance, the Securities Act of 1933 which provides regulations and laws to those offering somatic stocks to the public (University of Phoenix, 2014). Another regulatory environment is the Securities Act of 1934. The Securities Act of 1934 regulates and uses laws for trading stocks on markets that are consider as secondary markets like the New York Stock alternate. The Securities Act of 1933 also provides the requirements for financial reporting and auditing for corporations (University of Phoenix, 2014).When looking at the history of the business environment regulatory sub bearing has been part of the process of conducting business. In addition, in most industries the different organizations are going to find different rules and regulations that are presented by the government, requiring companies to follow them. In the event, these are not followed the business will be confronted with penalties for not following the regulations that are clearly defined by the government. As time progresses, m some(prenominal) regulations were created to help and keep open fraud against the public. Som e of these regulations include the requirement of state filing, and laws to create fair lending to the public. An example of this is the Securities and vary Commission also known as the SEC. The SEC is a major aspect of the regulatory environment. The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation (SEC, 2013, para. 1). In straightaways environment, many are utilizing the market as a way to true(p) their future.The way to secure the future is by purchasing and paying for a home, pay for children college tuition, as well as anyother expenses. As investors, it is classical that the SEC does protect these individuals. According to the SEC (2013) the common interest of either Americans in a growing economy that produces jobs, improves our standard of living, and protects the value of our savings means that all of the SECs actions must be taken with an eye toward promotin g the capital formation that is necessary to sustain economic growth (para. 4). The U.S. Securities and Exchange Commission (2013) states the laws and rules that govern the securities industry in the United States derive from a simple and straightforward archetype all investors, whether large institutions or private individuals, should have access to certain basic facts about an investment funds prior to buying it, and so long as they hold it (para. 6).To ensure this rule is followed by ever so organization the SEC requires public companies to make the appropriate financial state available to the general public. qualification this statement public, future investors as well as current investors can clearly see and date whether or not the investor wants to purchase, sell or hold an investment. The SEC (2013) also states the result of this information come down is a far more active, efficient, and transparent capital market that facilitates the capital formation so important to ou r nations economy (para. 7). The SEC is proactively working with other major markets that participate in environmental securities to certify that this guidepost is being followed. One of the SEC functions is to supervise the participants in the area of securities world. The securities would include the areas of securities exchanges, securities brokers and dealers, mutual funds as well as investment advisors.Another function the SEC provides is the promotion of disclosure of market cerebrate information and to maintain appropriate dealings. In addition, as a yearly procedure the SEC submits well-bred enforcement actions to those individuals and companies violating any of the securities laws. The infractions can include story fraud, trading misconduct, and providing deceptive as well as bastard information in regards the companys procedures or securities. In doing this yearly event and disclosing market connect data, it allows the SEC to protect companies and individuals against fraud. The SEC is an organization that works closely with other institutions to ensure rules and regulations are implemented and followed by the public. Some of the institutions that work with the SEC include Congress, self-regulatory organizations such as stockexchange, federal departments, the state securities regulators, and different private sector.The Securities and Exchange Commission is one of the main regulatory environments that assist to protect the public from fraud that a corporation can commit. Another regulatory environment that collaborates with the enforcement of the rules and regulations is the Sarbanes Oxley Act (SOX). The Sarbanes Oxley is a regulatory act passed by Congress in 2002 in response to a series of massive corporate frauds (i.e., Enron, WorldCom) (University of Phoenix, 2014, p. 3). When Congress passed the Sarbanes-Oley Act, it was to provide greater protections to investors, creditors, and other stakeholders (University of Phoenix, 2014, p. 3). SOX will provide greater protection by cut down unethical corporate behavior (University of Phoenix, 2014, p. 3). The SOX play a major function with the SEC because not barely this also helps protect the public from fraud a corporation can commit, but because this can provide solutions to issues, the SEC is confronted with based on fraudulent accounting practices.A scandal and major concerns on how American Corporations are governed was the Enron and WorldCom scandal of a series of massive corporation frauds. As a result, the unexclusive alliance history Reform and Investor Protection Act of 2002 were developed. The act was established to improve transparency, and to create new standards for accounting firms, for management at senior level, for executives, and for board members of public companies. According to corporeal Secretary (2014) a instruct this act present is that companies are required to have robust internal control systems that can be built into their compliance pro cesses to promote integrity and accuracy within their business operations (para. 2).With the passing of the Public Company news report Reform and Investor Protection Act, Congress intent was to help reduce unethical behavior and to eliminate future corporation scandals. As a result of the creation of the Public Company chronicle Reform and Investor Protection Act the penalties for fraudulent financial activities are more severe (Corporate Secretary, 2014). The Sarbanes Oxley Act has contend an important role in the regulatory environment which will protect the public from fraud within corporations. Even when this act has played an important role it is clear the implementation of the act by command is not going to solve the problem of fraud. However with the implementation of The Sarbanes OxleyAct, of The Securities and Exchange Commission, The Securities Act of 1933, and The Securities Act of 1934 it has assisted with minimizing fraud as well as to create transparency when com panies are following rules and regulations presented by the government.ReferencesCorporate Secretary. (2014). Ten events that have changed corporate governance. Retrieved from http//www.corporatesecretary.com/articles/regulation-and-legal/12277/ten-events-have-changes-corporate-governance/ University of Phoenix. (2014). Week 1 Study Guide Introduction to Financial Reporting. Retrieved from University of Phoenix, ACC561 Accounting website. U.S. Securities and Exchange Commission. (2013). The Investors Advocate How the SEC Protects Investors, Maintains Market Integrity, and Facilitates Capital Formation. Retrieved from http//www.sec.gov/about/whatwedo.shtml U.S. Securities and Exchange Commission. (2013). Codification of Staff Accounting Bulletins. Retrieved from http//www.sec.gov/interps/account/sabcodet1.htm