Sarbanes-Oxley Act of 2002 - Essay Example

The establishment of the SOX Act facilitated accuracy in the financial information provided by top management of organizations and there were also penalties for those individuals who were involved in fraud.

Legal issues the legal business issues raised in SOX Act include corporate and accounting scandals, corporate board responsibilities, criminal penalties, auditor independence, internal control assessment, corporate fraud accountability, financial disclosure, and corporate governance. These legal issues in the SOX Act require the Securities and Exchange Commission to implement rulings on requirements to comply with the law Holt (2008). According to Holt (2008), the SOX Act may affect ethical decision-making in today’s business environment positively by improving the confidence and behaviours of investors with regard to the uprightness of corporate financial statements.

The SOX Act introduced a regulatory business environment into the United states financial markets hence the investors are safe to conduct their businesses without corrupt business practices. Weak corporate governance procedures made had made it impossible for businesses to grow but with the enactment of the SOX Act this problem was reduced. Other legal issues that affected businesses prior to the SOX Act are auditor conflicts of interest, boardroom failures, and inadequate funding from the Securities Exchange Commission.

These problems were however solved with the enactment of the SOX Act. The act had a code of conduct containing requirements regarding corporate governance, financial practices, criminal penalties for those who violate the rules, and accounting controls. Criminal penalties SOX Act provides criminal penalties for influencing United States agency investigations. Section 802 of the Sarbanes-Oxley Act states that anybody who destroys or makes a false entry in any record or document with the intent to influence proper administration of any matter within the jurisdiction of any department of the United States or any case filed under title 11, shall be fined or imprisoned not more than 20 years, or both.