Bush Signs Bill Aimed at Fraud in Corporations, Research Paper Example

Introduction

Business assets are particular business elements deserving particular attention especially when it comes to determining the sense of protection that is needed to make sure that these resources are properly managed and used for the sake of improving the way of development that the organizations take into full account. This is why the Sarbanes-Oakley Act was further established. The said act is noted as the Public Company Accounting Reform and Investor Protection Act. Tis act aims to provide a distinct standard that US public companies are expected to give particular attention to.

Concentrated on accounting reformation, the SOX law insists on how improved learning course on how business organizations are managed are supposed to be focused on empowering financial operations dedicated to defining the path the business entities take into account. Divided into eleven sections, the concentration of the act to pursue transparent accounting operations especially among publicly owned organizations created higher standards of concentrated reforms on accounting operations that are relatively dedicated towards increasing organizational competencies directed to developing clear accounting practices.

The Effects of the Act on Modern Accounting   

The primary focus of the SOX act is to make sure that public entities remain true to their public promise of providing transparent operations of development that could help the society improve their lives further. Corporation responsibility is one aspect that holds organizations clearly connected to the society they are supposed to exist with, they are supposed to serve accordingly. Most likely, it could be understood that the set of corporal responsibilities serving as one of the most effective foundation of operations that organizations depend upon create the most efficient outline for growth that businesses take into account as chances of expansion are being fully considered by the administrators.

Back in the days, accounting operations are kept inside the rooms. Not all organizational accounting operations are made available for public scrutiny. It has been observed though that this particular practice has created specific lines and marks of corruption especially among publicly owned entities. The desire to gain profit through distinct strategies often bring about a sense of chaotic situations among businesses due to the misguidance coming from their administrators accordingly. Financial operations have particularly been under the dim situation thus making it easier for financial managers to adapt malicious strategies that often involve corrupt operations that are dedicated towards gaining as much profit is possible without necessarily thinking of how the strategies are going to affect the values that are most important for the pubic who are being directly affected by the business itself.

Modern accounting has emerged to be more transparent and much easier to scrutinize by the public for the possible flaws they have in relation to managing their finances as well as other operations dedicated to gaining more profit for the organization to embrace relative growth as desired. Through the help of the Securities and Exchange Commission, the creation of such laws has become more effective especially that the policies and steps for redefining the path of business development became much clearer. One such case that could be noted as under this matter is that of the situation that happened with Wal-Mart and its involvement in foreign corruption in relation to utilizing the service of outsourced Mexican workers. Wal-Mart faced the controversy of having been accounted for the imbalance of management as they intended for their employees to receive less than what they are due. Relatively, the SOX Act insists that corporate lawyers ought to have reported this matter immediately, which did not happen in the case of Wal-Mart (Kuschnik, et al, 2008).

Administrators of public companies have been well guided as to what their roles are supposed to be and how they are supposed to give attention to the new options of development opened for them to embrace (Mckinsey, et al, 2007). Such attention to details have allowed business entities to become more attentive to how they handle their responsibilities to the public, giving them better chances of measuring how their operations are likely in par with the goals they have set and the supposed responsibilities they are in need of responding to.

Besides the improvement of transparency, there had also been the creation of different local agencies and branch-operations that are supposed to oversee the overall condition of operation that public companies are supposed to give attention to. For instance, the Public Accounting Oversight Board aims to insist on seeing the transparency of accounting operations that business organizations tend to embrace and adapt to as they operate within the market. Among the responsibilities taken into account by this particular agency includes seeing how compliance audits are completed as well as how quality control is applied among specific entities.

The SOX act also intends to create a distinct sense of auditor independence. This point of independence gives the auditors a chance to adapt operational strategies that they think would best fit the natural value of the business they are engaging with. Relatively though, this does not mean that the freedom the auditors are given is unlimited. On the contrary, limitations are made certain enough to make sure that business administrators would need to become more careful and cautious about their actions thus making distinct impact on how they establish their reputation among the public whom they are supposed to serve accordingly.

To make the operations more transparent and easily recognizable, enhanced financial disclosures are determined to be the foundation of accounting practices especially in publicly owned companies. These disclosures are dedicated towards helping the public understand what the organizations are going through and how they are managing to utilize their wealth to support the needed operation of the business for the sake of profiting from the entity and for the sake of serving the public with balanced views of their values. When such disclosures show a distinct mark of imbalance, the emergence of analysis for the conflicts of interest needs to be given specific attention to. It is through this that the values of the organization measured in par with that of the values of the public is given specific attention to. The commission Resources and Authority is given the specific power to oversee such investigations and make sure that administrators take a serious reflection on how they operate with the public values accordingly. To make the application of the law more effective and distinct especially in mandating a better sense of accounting practices among public companies, the implication of harsher and more specific punishment for organizations that do not follow through the principles imposed by the law creates a stronger power of control for the SOX act to be well accounted for.

Reflections and Learning

The determined need for the creation of the SOX Act is one aspect of modern business operations that has created a definite change on how modern organizations are supposed to be managed accordingly. Focusing on financial operations and the transparency of their presentations for public knowledge and scrutiny has created a definite impact on how accounting operations are redefined to assist organizations on becoming more effective in managing their finances while they are making sure that their goals are met with accordingly without necessarily hurting the values that the public gives much attention to (Kimmel, et al, 2011) . Through the implicative application of the SOX Act, it could be realized that the reality behind the insistence of what good accounting works are about and how they ought to guide every business organization to become more concerned about how they define their goals along with their social responsibilities becomes even more effective in producing good accounting practices in modern businesses at present.

Conclusion

Modern business organizations are highly dependent on the internet, and somehow, to make everything more distinctively recognizable and determinably manageable, the application of the SOX Act is something that needs to be defined along with the desire to establish much stronger companies that are dependent on accounting transparency. Making their business accounts available for public viewing through financial portals in the internet makes business operations even much easier to be noted fully by the public; which in turn makes it easier for business organizations to establish publicly acceptable reputation amongst themselves as they face the need to provide outstanding service and products to the public.

References

Kimmel, PhD, CPA, Paul D.; Weygandt, PhD, CPA, Jerry J.; Kieso, PhD, CPA, Donald E. (2011). Financial Accounting, 6th Edition. Wiley.

Bumiller, Elisabeth (2002-07-31). “Bush Signs Bill Aimed at Fraud in Corporations“. The New York Times.

Mckinsey& Company (2007). “NY Report“. Schumer Senate website.[dead link]

“Not Everyone Hates SarbOx“. BusinessWeek.com. Bloomberg L.P. 28 January 2007.

Kuschnik, Bernhard; The Sarbanes Oxley Act: “Big Brother is watching” you or Adequate Measures of Corporate Governance Regulation? 5 Rutgers Business Law Journal [2008], 64–95;