Sarbanes-Oxley Act of 2002, the Securities Act of 1933, and the Securities Act of 1934 - Essay Example

memorandum TIM FERCHILL …………….. SARBANES-OXLEY & OTHER REQUIREMENTS FOR PUBLIC COMPANIES AUGUST 2, Sarbanes-Oxley RequirementsAccording to the Sarbanes-Oxley Act 2002, the fundamental requirements for publicly held organizations have been highlighted as follows:Requires the investors of the companies to receive each financial and other information with respect to securities that are being offered for public saleDetail statements regarding the roles and responsibilities of the company’s management including CEO and/or CFO Detail statements regarding the establishment and maintenance of the internal controlling structure, tools and practices for reporting financial performanceStatement detailing the identification of the accounting framework used by the company in order to evaluate the controlling process within the financial reporting functionsStatement regarding the internal control system of the management along with their effectiveness assessment reportAppropriate attestation of the company’s external auditors, regarding the effectiveness of the management, while performing internal controlling measures for developing financial reportsSources: (U.S. Securities and Exchange Commission, 2014; Kimmel et al., 2010)Securities Act of 1933Securities Act of 1933 is often considered as ‘Truth of Securities’, which requires an effective set of factors for the companies in terms of calling for registration.

The following are the fundamental requirements associated with the Securities Act of 1933.Detail information about the properties and business assets of the companiesA clear description of the company’s securities that are offered for saleClear information regarding management strategies and practices of the companyRequires to ensure that the company’s financial reports are certified by a group of independent accountantsSources: (U.S. Securities and Exchange Commission, 2014; Kimmel et al., 2010)However, the Securities Act of 1933 does not require all offerings of securities to be mandatorily registered.

In this regard, few exemptions of the registration requirements have been provided hereunder.Private offerings of securities must ensure to meet limited numbers of institutions or personsOfferings of securities must be of a limited sizeIntrastate offerings of the securities andSecurities of federal government, municipals and state governmentSources: (U.S. Securities and Exchange Commission, 2014; Kimmel et al., 2010)Securities Exchange Act of 1934The Securities Exchange Act of 1934 generally includes the authority to regulate, register along with supervise brokerage companies clearing agencies, transfer agents and Security Regulatory Organizations (SROs).

The major requirements associated with the registration of this act includesThe Act requires different types of market participants including brokers, exchanges, clearing agencies and transfer agents for registering with Security and Exchange CommissionIt requires disclosure of the essential financial information, where any individual wishes to acquire 5% securities or more either by direct purchase or in the form of tender offerThe act requires the assessment of company’s disciplinary actions in response to different fraudulent conducts by the individualsSources: (U.S. Securities and Exchange Commission, 2014; Kimmel et al., 2010)ConclusionThe Sarbanes-Oxley Act is deemed to be quite effective in protecting the investors and enhancing the factor of accurateness and reliability in various corporate financial activities.

It has further been noted that the act mainly aims at enhancing the above mentioned aspects on a constant basis. By the implementation of strict laws along with rules for audit committees of public companies and binding accounting professionals’ functions under the stated regimes. In this regard, the Act includes a generous set of requirements that ensures prohibition of potential crimes or fraudulent activities regarding the accounting and financial performance of the public organizations.

ReferencesKimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2010). Accounting, Fourth Edition. United States of America: John Willey & Sons, Inc.U.S. Securities and Exchange Commission. (2014). The laws that govern the securities industry. Retrieved from http://www.sec.gov/about/laws.shtml