Law 421 Week 5 Article Review

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Article Review Sarbanes-Oxley Act (SOX Act) of 2002 - 421/LAW
October 21, 2015
How Does the Sarbanes-Oxley Act of 2002 Affect Small Business Owners? (Chron, 2015)

Article Synopsis Senator Paul Sarbanes and Representative Michael Oxley proposed the Act to toughen corporate liability, prevent scandalous fraud, and to protect company investors. Companies would go broke soon after showing and reporting that their financial reports were sound and company is in good standings. An example would be Enron. Knowingly gave incorrect financial numbers on their transactions information to the government auditors to hide huge losses. Congress passed the Sarbanes-Oxley Act following corporate scandals to make companies accountable for their financial records (Chron, 2015).
The Sarbanes-Oxley Act would magnify management's judgement about full disclosure and ethical practices by making them more aware of the possible outcomes should they be less than honest or fail to maintain compliance. The Sarbanes-Oxley Act holds executive and financial officers of a company answerable for the financial information they provide. When there is a change in the finances of a company, they must report the changes right away. They are not to wait until the next financial report. Companies large and small are required to report specific fiscal information, and procedures to ensure all financial records are legal. All public companies, large and small have to follow Sarbanes-Oxley Act. While large companies have employees that can create these checks and balances needed for auditors, small companies do not and will have to invest in a program to do this. Small companies can use the free framework designed by the Committee of Sponsoring Organizations of the Treadway Commission (Chron, 2015).
Legal
Companies do not want to be noncompliance with Sarbanes-Oxley Act. Penalties will…...

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