The Sarbanes Oxley Act Of 2002 - 2376 Words

Introduction In this paper, I will be discussing the Sarbanes-Oxley Act of 2002. I will divide the paper up into four sections: the history of the act, trace its implementation, discuss its impact on society, and analyze the efficiency of the act. The act itself is made of of 11 sections or â€Å"titles†. Each title is a major key point in the act which also goes into more depth by containing several sections within it. This paper will me going over all of the sections covered in the act, but will focus on the major sections that have proven this act to be efficient in its purpose and the negatives as well. This act has been quite controversial regarding its strengths and weaknesses, but it contains some key values that should be used as a†¦show more content†¦Despite major loses, the companies grew because Enron essentially believed that â€Å"saying the right words, turning around three times and throwing salt over your shoulder could somehow transform something without econom ic substance into something with economic substance. (SEC Historical Society)† Due to this misleading and fraudulent act, shareholders lost billions of dollars when the companies crashed and the share prices went down with it (Citeseer). After uncovering several scandals from companies such as Enron, Worldcom, and Tyco, people found it difficult to trust and invest in companies again. As a result to this unforeseen and unethical scandal, the Sarbanes-Oxley Act was passed on July 25, 2002. The House approved this act with a vote of â€Å"423 in favor, 3 opposed, and 8 abstained†, showing a unanimous favor in the necessity and practicality of the act. The Sarbanes-Oxley Act was also known as the â€Å"Public Company Accounting Reform and Investor Protection Act† (in the Senate) and the â€Å"Corporate and Auditing Accountability and Responsibility Act† (in the House), or simply SOX (Citeseer). Its purpose is to ensure the honestly of the company’s financial statements and to also make shareholders feel safe with where they are spending their money. In order to keep businesses running and the society’s best interests, this act is necessary. It is