The Sarbanes Oxley Act 2002 - 1499 Words

Introduction Many companies have failed their shareholders through deception and impartiality within the last few decades, examples include Enron, Maxwell and TYCO. Enron were liable for irregular accounting procedures which fringed upon fraudulent behavior, conducting business with other companies which they owned and making their financial statements looking more presentable by excluding losses. The share price inevitably collapsed from over $90 to virtually nil, leading to bankruptcy. Another company, TYCO International, overstated their earnings, placing them in violation of the securities exchange act. Similar to Tesco recently. These cases caused investors to lose billions. The American government realized the effect this had on the†¦show more content†¦As a result many American based businesses relocated to the UK stock market as the FSA â€Å"regulates with a lighter touch† Independent, meaning a greater influence on self –regulation. The act lead to the UK’s equivalent of it, the combined code of corporate governance. Which unlike SOXY is not a legal document The wrongful acts by firms go back to even before the 80’s, the problems were acknowledged, and as a countermeasure to protect shareholders the Cadbury report was created, it sought to improve corporate governance among UK companies this led to the Code of Best Practice which was adopted by the London Stock Exchange. This â€Å"proposed a system of self- regulation by listed companies. â€Å" Offiong As well as auditor governance, businesses are also provided with guidance, in the form of the companies’ act, i.e. the CA 2006 part 15 which details company responsibilities with regards to accounts and reports. This outlines duties, i.e. the duty to keep accounting records and states that directors mustn’t approve accounts unless they â€Å"give a true and fair view† notes. Regulatory Framework As the times change so does the expectations expected from auditors, previously auditors would only look at books but now there is a focus on credibility and integrity. The purpose of regulation is to ensure quality, auditors seek to provide a service which meets the requirements to both the customer and the