Stringent Regulatory Changes - Essay Example

A critical evaluation of the article The Costs and Benefits of Sarbanes-Oxley by Julia Hanna gives an insight into the relevance of this act. Besides, Julia gives a broader picture of the extraneous factors that surround the act (Julia, 2014).

The article asserts that the motive of creating the act was in good faith as it addresses the threat of increased fraud in the corporate world. However, the article also hints at some faction of the society viewing the act as political motivation. This is a normal observation that corporate regulations which have a significant influence on the government revenue collection and general economic progress of the country must attract such criticism. Sarbanes-Oxley Act (SOX Act) of 2002 is noted as effective in taming business malpractices that constitute fraudulent conduct of corporate financial governance. The aforementioned incidents are highlighted in the article as reflective of the potential threat hence the timeliness of this act. The article explains that the criterion that was used to create the act emphasized cost-benefit analysis.

The act is expansively addressed by the article in terms of how it will boost ethical practices in corporate governance. The investors’ interests remain the key role of the company management. It is therefore unfair to rob the investors of their hard-earned commitment to the stock market. The efficiency with which the act is applicable is overwhelmingly supported by Julia based on two practical premises. The flexibility of the act in terms of the exemption of some small firms seems to be a positive idea. As can be noted in the article, the widely noted heavy cost of sustaining this regulation by firms justifies the exemption of otherwise small companies. This to some extent is aligned with the ethical aspect of the act in its application (De & Argosy University, 2006). The financial transparency of the corporations is emphasized as the basis of the ethical duty of the managers. Internal control measures and financial management practices have seen much boost since the enactment of SOX.

The overall rating of the act from the managers of various companies attests to the fact that it has revived investor confidence. The effective implementation of the act can be attributed to the harsh punishment that accrues to disobedient companies. According to the act, non-compliance renders an individual liable to a fine under this title or being imprisoned for not more than 20 years, or both. The overall analysis of the article shows significant inclinations toward the benefits of the act and affirms its appropriateness towards achieving public corporation reporting standards. The article proposes the need for further consultation to incorporate flexibility in addressing such important corporate governance law.