Sarbanes Oxley Paper - Research Proposal Example

The investor of equity and money markets were under heavy scrutiny and investor had lost confidence in the accountability and truthfulness of the financial data coming out on daily basis from the public corporations registered in the financial markets such as NYSE and NASDAQ. Congress and the Security and Exchange commission intervened in the situation by creating a new financial regulation called the Sarbanes-Oxley Act (SOX) of 2002. The Sarbanes Oxley Act purpose was to increase investor confidence by reforming accounting practices to improve accountability, auditor independence, internal controls, and executive responsibility to ensure financial fraud at the executive level of public companies was became punishable by jail time (Aicpa, 2008).

This report analyses business compliance, the Sarbanes Oxley Act and its ethical implications. The two congressmen who created the principles and concepts of the Sarbanes-Oxley framework were Paul Sarbanes and Michael Oxley. The Sarbanes-Oxley Act covers multiple issues which are arranged into eleven titles (Soxlaw, 2006). Out of the eleven titles six of them deal with business compliance. The five most influential parts of the Sarbanes Oxley Act of 2002 are sections 302, 401, 404, 409 and 502.

Section 302 deals with the topic of corporate responsibility of financial reports. The Act mandated a series of new certification concerning newly released financial reports of public corporations. Some of the new certification protocols included the signature of the CEO which this person liable in case of financial fraud, information regarding internal controls, and new auditor reports to ensure there were no untrue statement, material omission and that the reports were presented in fair manner (Soxlaw, 2006).

Section 401 of the Sarbanes Oxley Act adds to the credibility of financial statements by enhancing the financial disclosures. One of the key