: Sarbanes-Oxley Act - Assignment Example

Through SOX, the congress protects investors from fraudulent executives and dishonest auditors by refining the regulations of corporate financial reporting and practices (Young, 2008). Indeed, it established new accounting and auditing procedures and public oversight that includes enhanced civil and criminal penalties for SEC violations and criminal fraud (Rolf, 2005). Prior to the establishment of SOX, financial accounting procedures depicted disastrous frauds, auditors worked for the executive, and there were few reviews on corporate frauds thus the investors lost confidence in the U.S market. However, SOX seeks to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes.

The Sarbanes-Oxley also requires Chief Executive Officers and Chief Financial Officers to verify the accuracy of financial statements thus placing the responsibility on management to ensure accurate and legitimate reports of financial standing (Young, 2008). Indeed, SOX created transparency of financial reports created by the increase in independence of auditors from company management (Young, 2008). Many companies are also reporting material weaknesses of internal control and PCAOB oversees the operations of small capital firms (Young, 2008).

These factors restore investor confidence in management and encourage them to have confidence in the U.S. public market. Notably, SOX has responded well to various corporate frauds like the Enron, WorldCom, and other recent scandals (Rolf, 2005). However, for companies to enjoy the benefits of SOX they must to strengthen their corporate structure and solidify their reputation in the public market and appreciate the potential value in Sarbanes-Oxley Act (Young, 2008). Sarbanes-Oxley Act of 2002 established the Public