Benefits Of Sarbanes Oxley Act

Sarbanes Oxley act is one of the most important legislation in the United States. This act was signed on July 30th 2002 in the US. With the implementation of this act, several important legislative and financial practices were introduced in the corporate governance regulation. This act is popularly known as the Public Company Accounting Reform and Investor Protection Act of 2002. The major reason to pass this act was the corporate and the accounting scandals that were emerging. The reason for the growth of these scandals was the downfall of the public trust on the accounting procedures and the reporting practices.

This act gained its name from the names of Senator Paul Sarbanes and Representative Michael G. Oxley. With the mode of this legislation, the government has been able to introduce a number of rules for the organizations as well as the public companies.

All the public companies are required to meet the financial reporting as well the mandates of certification for financial statements of any year filed after 15th November 2004.

Similarly all the smaller companies and foreign companies are required to meet these mandates for any statement they file after July 15th 2005.

This legislation has several features and provides new and improved standards for the public company boards, management, and the public accounting firms of the United States. There are eleven titles under this act. These titles contain several sections and sub pages. These sections include all the important areas and cover the topics like corporate board responsibilities, criminal penalties and sentences. According to the rules of this act, the Securities and Exchange Commission (SEC) is required to implement the requirements needed for the new laws. Many people believe that this legislation has helped to prevent the economic damages that occur.

The Sarbanes Oxley Act also provides the issuers and the organizations with the facility compliance.

There are a number of sections that specifically deal with Sarbanes Oxley compliance like section 302, 404 etc.

There is a very unique feature in this legislation. It allows the freedom to plan compliance. But one needs to be very careful while planning the compliance. Proper information is required about what is the Sarbanes Oxley act. The personnel need to have a complete knowledge of the Sarbanes Oxley Act definition and sections if they need to manage and plan their compliance on paper.

Sarbanes Oxley act has enabled to establish a quasi-public agency. According to this legislation, the Public Company Accounting has the responsibility of overseeing, regulating and inspecting the discipline of the accounting firms and the auditing officers of the public companies. Sarbanes Oxley act has helped to curb the scandals that were arising and has provided the organizations with profitable and clean dealings.