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This is meant to strengthen the auditing, accounting and financial practices of the company.
The act also states that chief financial controllers and auditors need to provide supporting evidence that will be used to whistleblow on the abuse of company funds (Morgan et al, 2008).
The SOX bill does not apply to privately held companies as many of the laws deal with the management of shareholder, corporate and public funds which are usually common in publicly traded companies.
They both passed two different bills that pertain to the same problem which had to do with corporation's auditing accountability and financial fraud problems within corporations. 2673) brought by Senator Sarbanes and the other bill (H. Furthermore, according to an online guide to the Sarbanes-Oxley Act the major compliances to the act rest on 5 sections: The first one is the Sarbanes-Oxley section 302, which is found under Title III of the act, pertaining ' Corporate Responsibility for Financial Reports'.
The executives agreed that while it was too soon to determine the benefits of complying with the act, there were considerable costs such as audit fees which were expected to increase by approximately 40% during the first year of compliance.
Business managers working for BP saw the duplicate testing of internal controls to dilute the business practices of the organization as they saw it to be a frustrating exercise.
With regards to the benefits of the act, various financial analysts and experts noted that the borrowing costs were lower for companies that had improved their internal control measures while corporate transparency had improved within many publicly traded organizations during the first year of compliance.
Section 404 of the act ensured that companies had conservative reported earnings where financial reports and statements underwent verification to determine their accuracy before being presented to the various stakeholders of the company.
They instead preferred to perform a single internal control testing exercise which would enable them to identify and document any financial issues or problems (Bednanrz, 2006). This essay on Sarbanes-Oxley Act was written and submitted by user Kolton Sharp to help you with your own studies.
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