Business Soxlaw Compliance

BUSINESS SOX COMPLIANCE

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In the month of July of the year 2002 the Sarbanes – Oxley Act was ratified into Law by Congress. This was in response to several scandals of high profile, which had been noted to have began in the latter months of the previous year (2001). Compared to other laws, the Sarbanes- Oxley Act is generally thought of as the most far-reaching to date and that after the Securities Acts that were ratified in 1933 and a year after. That is to say, since the time of Franklin Roosevelt’s presidency, there have been no reforms to the business practices of the Americans that have been as far – reaching as the Sarbanes Oxley Act. What should be noted is that Sarbanes and Oxley were not just common citizens, but were people holding high offices in the United States government. Both of them were US senators, but while Paul Sarbanes was a democrat and the Senator of Maryland, Michael Oxley was a republican, and a senator in Ohio. It is highly likely that the stringency with which the law was ratified drew from the fact that people holding high office such as the two senators could be embroiled in such scandals as they were. The Sarbanes – Oxley Act is a law that requires more disclosures than was the case before it was ratified, and even more important than that is the fact that it makes provisions about governance mandates that are substantive in the corporate arena. This practice is thought of as being unprecedented in as far as the federal history of securities legislation is concerned. Furthermore an incursion into corporate governance by the federal government in such a manner as was the Sarbanes Oxley Act had never before been thought of or imagined.

Through the Sarbanes Oxley Act a regulatory regimen has been put in force that is entirely in a class of its own, and that for auditors working with public companies. Some of the well- known corporate scandals likely to have been unearthed after the ratification of Soxlaw include Adelphia, Dynegy, Enron, Quattrone, Rite Aid, Tyco, Worldcom, Zerox and ZZZ Best, all of which were in one way or another related one to another. Through scandals such as these, it had been observed that complying to the Sarbanes – Oxley Law was not a problem just facing United States corporate bodies, but also affecting other companies outside the US, for example the Parmalat and Royal Ahold cases.

Through empirical study, it has been shown that as more organizations seek to comply to the provisions of the Sarbanes Oxley Act, these organizations tend to voluntarily disclose information about their security activities (Gordon, Loeb, Lucyshyn, & Sohail, 2006). These activities also tend to receive more focus after the law was ratified