Sarbanes-Oxley Act of 2002 Essay example

Submitted By bwaisi
Words: 874
Pages: 4

Auditing is a professional job that existence of it depends on the virtue of practice in order to serve the interests of the community. There are some idea that have discuss the role of audit professional ethics and the need to establish a mechanism to monitor compliance with ethical standards as well as violations of judicial ethics. Of these, the author continues to discuss the regulations on professional ethics for auditors.
The provision on professional ethics for the audit practice is formed by the relationship between professional and social environment. The ethics provisions commonly found in the standards of professional ethics and regulations of the law. Although they both refer to ethics issues, but how to promulgate and content differences. In the U.S., the auditing standards and professional ethical standards by professional organizations audit (AICPA) issued and fully control the quality by professional organizations to undertake. Self-control model derived from the operation causes the independent auditors the United States has flourished, and very soon because the economy is funded by the stock market. The growths of audit activities from the absence of state regulations have led to the formation and development of strong professional organizations.
Until the 2000s, a number of financial scandals and accounting outbreak led to the collapse of the leading companies in the world and cause serious effects to the interests of the public, including errors of audit firm. The United States began to intervene in audit activities through the issuance of the Sarbanes-Oxley. Sarbanes-Oxley Act 2002 was approved by Congress on July 30th. 2002 in order to improve the quality and transparency of financial reporting, greater accountability of the Board, Board of Directors and auditors. Apart from some provisions relating to the independence of auditors, Sarbanes-Oxley Act also allows the Committee supervising the accounting and auditing of listed companies (PCAOB) under the SEC will manage the registration of auditor be allowed to audit listed companies, set up or accepted rules for the provisions relating to quality control, ethics, independence and other standards related to draft audit report and, conduct oversight of the auditing firms.
There are six main contents of Sarbanes-Oxley Act:
1. The CEO and CFO must sign in and commitment to ensure accuracy in financial statements that the company announced in public investment. The report should address the most realistic shows the performance of the company. If the information is wrong, the position could be sentenced.
2. Companies must set up accounting oversight board of the company including its competence is especially important than ever before and supervise the work of audit firms do for that company. A series of new regulations and standards are also given.
3. Board of Directors may not directly decide the fate of the audit firms to contract with them that right belongs to a company's Audit Committee. This committee will decide to hire, not hire, fire - no layoffs, termination or termination of contracts with companies that audit.
4. The audit firms were drawn down to provide the right services for their audit clients to ensure they benefit from being shaken. These services must be made by other companies offer.
5. In the annual report must have an internal control report which, show the problems related to audit work on a fairly comprehensive. This report must be certified by the auditing firm.
6. The Act made very strict penalties if they violate the regulations on the audit as may be sentenced to 20 years in prison for crimes such as destroying documents.
The provision of Sarbanes-Oxley Act does not