Sarbanes-oxley Act Of 2002 Narrative Essay Example

to stress the significance of understanding the state before and after the act's implementation through three main points: comprehending the act itself, considering the pre-act era, and reviewing top cases. Compliance with this law is mandatory.

SOX compliance is mandatory for public organizations, regardless of their size. However, private companies are exempt from this act. Many individuals may lack knowledge about SOX and its origins in response to the collapse of Enron and other similar corporations. This overview aims to provide sufficient information for future reference.

In 2000, Enron was a prominent company in various industries including electricity, natural gas, pulp and paper, and communications with 22,000 employees and reported revenues of $111 billion. Fortune named it "America's Most Innovative Company" for six years in a row. However, the discovery of institutionalized accounting fraud caused their financial stability to be revealed as false leading to bankruptcy in late 2001.

CEO Dennis Kozlowski led Tyco International on an aggressive acquisition path from 1992-2001 resulting in over 1000 accounts obtained between the years of 1991-2001. Prior to merging with a subsidiary of ADT Limited in July of that year, Tyco was headquartered in Massachusetts before moving.

After the merger, ADT Limited fully owned Tyco International Ltd, based in Massachusetts. Accounting irregularities rumors emerged before a stock split in 1999 and were denied by Tyco's leadership. They accused the sources of selling shares short for personal profit. In November 27, 2002, the State of New Jersey accused Tyco and former personnel of violating the New Jersey RICO statute as a result of the Kozlowski scandal.

After the scandal, Tyco and its former executives faced over two dozen securities class-action lawsuits which were consolidated

and transferred to the United States District Court for the District of New Hampshire. The case In Re Tyco International Securities Litigation was cited for violations under both the Securities Act of 1933 and the Securities Exchange Act of 1934. On March 31, Tyco filed a motion to dismiss which was partly granted on October 14, 2004. Meanwhile, Bernard Ebbers' holdings in WorldCom's stocks increased in value until WorldCom's growth strategy was impacted by the telecommunications industry's downturn. The proposed merger with Sprint was abandoned in late 2000 causing decline in WorldCom's stock and increasing pressure on Ebbers to cover margin calls on his stock used for financing other businesses such as timber and yachting.

In 2001, Malik's (2003) report revealed that Ebbers persuaded the board of directors at WorldCom to issue corporate loans and guarantees totaling over $400 million to cover his margin calls. The fraudulent activity involved two primary tactics: recording 'line costs' on the balance sheet instead of as expenses and falsely inflating revenues through entries in 'corporate unallocated revenue accounts'. Following significant accounting scandals involving Enron, Tyco International, Adelphia, Peregrine Systems, and WorldCom, the Sarbanes-Oxley Act of 2002 was passed into federal law on July 30th that same year. Commonly referred to as Sarbox or SOX, it aimed to protect investors from experiencing severe losses when share prices plummeted due to deceitful practices like these which severely damaged public trust in securities markets.The Sarbanes-Oxley Act, also referred to as SOX, was implemented in honor of Senator Paul Sarbanes and Representative Michael G. Oxley by President George W. Bush. It received overwhelming support from both the House (423-3) and Senate (99-0). The Act

is composed of 11 titles, one of which is "Public Company Accounting Oversight Board (PCAOB)." This title sets standards for external auditor independence, addresses conflicts of interest, enforces auditor approval and rotation policies, and mandates reporting requirements. Other titles tackle corporate responsibility, enhanced financial disclosures, analyst conflicts of interest, commission resources and authority, studies and reports on financial accountability frauds committed by corporations or individuals , white-collar crime penalty enhancement,
corporate tax returns issues related to corporate fraud accountability . Additionally , the Act instituted an accounting oversight board that necessitates corporations to establish codes of ethics for financial reporting in order to increase transparency in their financial reports for investors as well as other interested parties.

It is crucial to bear in mind that the law mandates top executives' approval of their firms' financial reports and necessitates disclosure of stock sales by company executives. Additionally, it restricts companies from offering loans to top managers. The federal government had to intervene with companies and their accounting practices due to a significant amount of fraud resulting in billions of dollars lost for investors. Specific cases such as Enron, Tyco, and WorldCom were discussed extensively for illustrative purposes, emphasizing the egregiousness of these companies' actions.

The implementation of SOX was significantly influenced by these corporations, emphasizing the importance of promptly addressing errors and maintaining ethical accounting practices. Severe consequences for both individuals and other signatories accompany falsifying or manipulating financial documents. For further information, please visit http://www.

Visit soxlaw.com/index.htm for more info, which includes "Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron" by Bethany McLean and Peter Elkind (Portfolio, 2003) as well as "Extraordinary Circumstances: The

Journey of a Corporate Whistleblower" by Cynthia Cooper (Wiley, 2008).

This publication was authored by Ferrell, Fraedrich, and Ferrell in 2005.

There are two books that discuss ethics and deceit. The first is Business Ethics Ethical Decision Making and Cases, published by Houghton Mifflin Company in Boston, MA. The second book is Disconnected: Deceit and Betrayal at WorldCom by Lynne W. Jeter.

The Sarbanes-Oxley Act of 2002 website grants access to Om Malik's (2003) article "Broadbandits" starting from February 13, 2008. The link can be found at http://www.

One possibleand unification of the given text is:

Visit soxlaw.com/index.htm for more information.