The Concept of the Sarbanes – Oxley Act

Subject: Accounting
Pages: 2
Words: 291
Reading time:
< 1 min

The Sarbanes-Oxley Act is a very detailed description of the government’s decision to ensure that each corporate operating within the United States is transparent and accountable. The Act specifies sanctions that are meant to enhance compliance. To achieve this, the Act orders that all companies disclose all new changes as soon as possible. Disclosure of the relationships with other nonconsolidated companies and also financial statements are other factors that are specified within the Act that drive towards enhancing accountability and transparency.

The Act also came up with the Public Company Accounting Oversight Board which was given several responsibilities in the effort to ensure the above-mentioned objectives are achieved. The board has the role of ensuring that they register every public accounting firm, be it domestic or foreign. Secondly, it is the role of the oversight board to ensure that standards are set for audit report preparation. These include quality control, ethical considerations and also the independence of the auditors. Thirdly, the board plays the role of ensuring that all the registered firms are inspected by the board to ensure that they are complying with the regulations specified. These are just but part of the several roles played by the board.

These duties make me understand that I will have to behave ethically. Unlike initial practices where corporations operated on the principle of self-policing, the contemporary climate does not call for such activities. The present auditing realm after the Act puts me under accountability and transparency because all the activities that I do as an individual or as a firm will be required to comply with the Act’s specifications. Ethical decision-making will be part of me and the organization I work for.