Sarbanes Oxley Act Case Study

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Regulatory Issues The Sarbanes Oxley Act (SOX) restricts management from influencing auditors through manipulation or coercion. Therefore, Sullivan’s hostility over Cooper’s internal audit as well as trying to make Cooper hold off from completing the audit are violations. The SOX also contains two components that impact the fraud investigation: the fraud discovery and whistleblower protections. It enforces an extended statute of limitations that enables fraud to be discovered within two years of occurring or five years after committed. Extending the time frame enables Cooper to still come forward if she is stalled. Cooper is WorldCom’s whistleblower, but Section 806 “prohibits publicly-traded companies from retaliating against employees who report various acts of wrongdoing to their employers” (Foti 2013). Without this protection, there will be fewer investigations as employees may be too scared to come forward. (Colbert 2004) (Carozza 2008) (Foti …show more content…

In fraud investigations, the need to maintain professional skepticism is in accordance with professional due care. Furthermore, professional skepticism is when an auditor or a forensic accountant begins an investigation with the attitude that fraud is possible despite prior connections with the company. As I proceed through my WorldCom fraud investigation, I need to keep my mind open to the idea that I may find evidence of material misstatements. Any previous dispositions or biases prior to starting the investigation cannot create bias. WorldCom’s integrity and honesty are no longer relevant as I am required to focus on the compelling evidence found during my investigation. “… the auditor should not be satisfied with less-than-persuasive evidence because of a belief that management is honest” (Consideration of Fraud in a Financial Statement Audit

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