Events Leading Up to the The Sarbanes-Oxley Act

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The Sarbanes-Oxley Act was enacted on July 30, 2002. It was enacted by the 107th United States Congress. It is named after sponsors U.S. Senator Paul Sarbanes and U.S. Representative Michael G. Oxley. It is also known as the ‘Public Company Accounting Reform and Investor Protection Act’ in the Senate and ‘Corporate and Auditing Accountability and Responsibility Act’ in the House. The main purpose of this act was to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes. This act was enacted as a result to a number of corporate and accounting scandals including those affecting Enron, Tyco internationals, Adelphia, Peregrine Systems, and WorldCom. The Securities Exchange Commission (SEC) adopted many rules in order to implement the Sarbanes-Oxley Act.
The Enron Scandal escalated distrust amongst the shareholders, employees and government agencies. Thus, as a result the Sarbanes-Oxley Act was passed to protect the interest of all affecting parties. The Act is nearly "a mirror image of Enron: the company's perceived corporate governance failings are matched virtually point for point in the principal provisions of the Act." The Enron Scandal also revealed the unlawful practices followed by Arthur Andersen’s accounting firm. They helped Enron in altering, covering up, and destroying classified documents. The fall of Enron was due to alteration of documents by the higher authorities.
The Sarbanes-Oxley Act contains XI titles and 66 sections. Each title focuses on a particular area of business. This act covered many important issues such as auditor independence, enhanced corporate disclosure, corporate and criminal board accountability, corporate...

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...f the economy. If there are fewer scandals there will be higher growth in the economy. Section 802 of the Sarbanes-Oxley Act regulates companies from getting involved in any kind of unethical work.
In my opinion, the Sarbanes-Oxley Act was a positive step taken by the government in order to control unethical practices by the corporations. Section 802 of the Sarbanes-Oxley Act is the most important sections of all the sections as it punishes the corporations who try to alter documents. After this act was enacted SEC was able to uncover one fraud committed by Valueline in 2009. This is one of the most important accounting reforms acts. If such extensive acts were there during Enron’s failure, all of these might have been avoided. Corporations in greed of money make shortsighted decisions, which affects not only the company but also the entire country and its economy.

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