Avoiding Future Frauds with the Sarbanes-Oxley Act Essay Example for Free

Avoiding Future Frauds with the Sarbanes-Oxley Act Essay It is clear that the establishment of the Sarbanes-Oxley (SOX) act in 2002 was specific to reducing future financial fraud and imposing criminal penalties for publicly traded companies. What is not clear is whether or not the act has proved to be successful in its implementation and governance. The establishment of the act and subsequent amendments are intended to protect the public from fraud in the financial accounting of publicly traded corporations. In 2002, there were opinions both for and against the effectiveness of SOX. More than a decade later, there are still opinions on both sides of the debate. Criticism of the Sarbanes-Oxley Act The effectiveness of the Sarbanes-Oxley act has been highly criticized since its inception. One of the major contentions is that the Sarbanes-Oxley act has no provisions to differentiate the requirements for small publicly traded businesses from large conglomerates (that lead and often monopolize the marketplace). Publicly traded companies that are small in size may find the costs of compliance prohibitive to the future of their business (Coustan, 2004). Critics of SOX believe that this unnecessarily reduces the number of players in a competitive marketplace. The cost of compliance can be excessive for some smaller companies. Auditing expenses cause companies to seek private investment and become privately owned (San Antonio Express-News, 2007). Ten years ago, critics expressed â€Å"fears that small, publicly listed companies might not meet internal control reporting requirements without substantial additional expense; some may have to delist because of it. It could mean only larger companies will go public† (Coustan, 2004, p. 1). In recent years, this debate continues. Critics still express concerns â€Å"that Sarbanes-Oxley is overreaching and has placed unnecessary  restrictions on corporations that have and will continue to unduly inhibit corporate performance until they are removed† (Brite, 2013). Another major contention of critics is that the costs of compliance for outweigh the benefits in an international marketplace. Those against SOX feel that the costs outweigh the benefits and speak out in public forums stating that the â€Å"Sarbanes-Oxley has burdened the US financial market with costly rules and regulations that have reduced international competitiveness† (debate.org, 2014). There are those that openly share the opinion that the implementations of regulatory overkill through the 2002 Sarbanes-Oxley act â€Å"wrongfully make the innocent suffer for the guilty† (Gilmore, 2013). The reporting requirements of SOX are specific to businesses in the United States. Unlike American business, international business does not have the same requirements. â€Å"Regulatory compliance opposes economic costs on organizations and can affect their competitive advantage† (Srinivasan, 2014, p. 44). Increasing the cost for American business decreases competitive advantage in the worldwide marketplace. In addition to cost and competitive advantage, the structure of the bill has also been called into question. The Court of Appeals recently found difficulty with the wording of the amended 18 USC, citing that â€Å"paragraph (b) of the statute includes the word â€Å"knowingly† while paragraph (c) does not† (Bishop, 2013). The opinions of the Court of Appeals lends to the public opinion expressed in published CPA perspectives that â€Å"SOX was a hastily assembled bill† (Moran, 2013). Involved and cumbersome requirements cause confusion and frustration for companies attempting to comply with the Sarbanes-Oxley act even more than a decade after its implementation. Companies and lawmakers alike have had difficulty over the years with the interpretation of and compliance with the act. â€Å"SOX brought about many changes to the way public companies had to operate, and there was some question as to how these would stand up over time† (Moran, 2013). Positive Aspects of the Sarbanes-Oxley Act Despite complaints by critics, there are positive aspects of the Sarbanes-Oxley act that have withstood the test of time. Initial reactions have softened after smaller businesses were granted some relief in later amendments of the act. Larger businesses found that compliance with the act  increased investor confidence and contributions. In addition, the resultant increase in financial transparency has improved business relationships on many levels. First and foremost, there are many of the opinion that the enactment of the Sarbanes-Oxley act increased investor confidence and protection in the marketplace. â€Å"Does Sarbanes-Oxley prevent all bad actors from defrauding investors? No law could accomplish that. But it can and has deterred such activity† (Gillian, 2012, p. 1). Those in support of the Sarbanes-Oxley act agree that there is a positive side for investors and the businesses in which they invest. â€Å"A 2005 survey by the Financial Executives Research Foundation f ound that 83 percent of large company CFOs agreed that SOX had increased investor confidence, with 33 percent agreeing that it had reduced fraud† (Hanna, 2014, p. 2). With an increase in confidence and a perceived reduction of fraud, investors could more confidently make intelligent business decisions on the purchase and sale of publicly traded companies. Those on the positive side of the SOX act believe that the effects on small business have softened. Studies show that as companies become more accustomed to the costs of compliance, the expense decreases (San Antonio Express-News, 2007). In addition, the effects on smaller companies were ultimately deferred. â€Å"Audit standards also were modified in 2007, a change that reportedly reduced costs for many firms by 25 percent or more per year† (Hanna, 2014, p. 1). Although the costs of compliance decrease retained earnings, investors are more confident in the reliability of company reports (Gillian, 2012). â€Å"The cost of being a publicly traded company did cause some firms to go private, but research shows these were primarily organizations that were smaller, less liquid, and more fraud-prone† (Hanna, 2014, p. 1). These modifications of the act allowed more small businesses to remain competitive in the marketplace. Business relationships have also improved with increased transparency. The reduction of information asymmetry is a direct benefit to both the company and the investors. â€Å"Information asymmetry is a situation in which one party in a transaction has more or superior information compared to another† (Brite, 2013, p. 1). Periodic testing of internal controls required by SOX 404, increases transparency among internal and external stakeholders of the business. The American Institute of CPAs states on their website that â€Å"section 404B has led to improve financial reporting and greater  transparency† (American Institute of CPAs, 2006 – 2014). Conclusion and Opinion To evaluate the effectiveness of SOX in preventing future frauds, one must take into consideration the many different situations in which the legislation is applicable. Enactment of the Sarbanes-Oxley act increases corporate responsibility and sets restrictions on auditor services. This certainly reduces the potential for fraud; however it does not eliminate it. From a business perspective, compliance is beneficial. The costs of implementing the requirements may be high; however the benefit of increased investor confidence in a publicly traded environment is higher. There are going to be situations in which fraud is inevitable. Fraudulent wrongdoers and companies will find loopholes and the recent Court of Appeals case is evidence of that fact. As with any law, this regulation will reduce the frequency of, but not prevent, purposeful future criminal activity. References American Institute of CPAs. (2006 – 2014). Section 404B of Sarbanes-Oxley Act of 2002. Retrieved from AICPA: American Institute of CPAs: http://www.aicpa.org/advocacy/issues/pages/section404bofSOX.aspx Bishop, K. (2013, June six). Grand Theft Auto Meets the Sarbanes-Oxley Act. Retrieved from California Corporate and Securities Law: http://calcorporatelaw.com/2013/06/grand-theft-auto-meets-the-sarbanes-oxley-act/ Brite, C. (2013, June 30). Is Sarbanes-Oxley a Failing Law? Retrieved from University Of Chicago Undergraduate Law Review: http://uculr.com/articles/2013/6/30/is-sarbanes-oxley-a-failing-law Coustan, H. L. (2004, February). Sarbanes-Oxley: What It Means to the Marketplace. Retrieved from Journal of Accountancy: http://www.journalofaccountancy.com/Issues/2004/Feb/SarbaneSOXleyWhatItMeansToTheMarketplace.htm debate.org. (2014). Do you believe the Sarbanes-Oxley Act has failed? Retrieved from debate.org: http://www.debate.org/opinions/do-you-believe-the-sarbanes-oxley-act -has-failed Gillian, K. (2012, July 24). It Enhanced Investor Protection. Retrieved from nytimes.com: http://www.nytimes.com/roomfordebate/2012/07/24/has-sarbanes-oxley-failed/sar

elijah mccoy and lloyd war :: essays research papers

Idols, everyone needs them or at least just someone to look up to and admire. People need something to look forward to, aspire towards some kind of goal – basically ambition. For Minorities, specifically African Americans in engineering, role models in the engineering field aren’t glorified. It is not because people feel they are unimportant it is because they just haven’t been informed. For example many people know the clichà © The Real McCoy but they don’t know where it comes from; or why it has the connotations it does. Truth is McCoy was an African American mechanical engineer whose parents were runaway slaves in the early 20th century. It almost sounds like an oxymoron, a black engineer at a time when blacks weren’t even allowed to go to certain schools or sit at certain bars. However we still use that famous coined phrase and don’t realize the significance involved in its origins. Present day role models are also important, our histor y is one thing, but it is more conceivable when it can be seen in real life. Conceivable meaning easier to understand and recognize the potential opportunities this individual created. Lloyd Ward only the second African American to become a CEO of a major company. The thing about Ward is his willingness to succeed and ability to do so in untraditional fashion. Ward is also a mechanical engineer whose background is almost as unbelievable as his rise to the top. This report is about two of the greatest men who have ever lived; their accomplishments should be viewed as goals that we all can value and maybe one day copy. First a historical look at one of the most prolific and ingenious engineers of all time – who never stopped working and fulfilling his dreams. Elijah McCoy (1844-1929) was an American inventor born in Colchester, Ontario, Canada, to parents who had escaped from slavery in Kentucky in 1837. McCoy was best known for his inventions of devices used to lubricate heavy machinery automatically. McCoy went to Edinburgh, Scotland, at age 15 and studied mechanical engineering for five years. When he came home he became a railroad fireman on the Michigan State Railroad. Back then steam locomotives had to stop at intervals so that the fireman could oil their pistons, levers, and connecting pins. About 1870, while living in the town of Ypsilanti, Michigan, McCoy began to experiment with automatic lubricators for steam engines.

Communication Challenges to Modern Day Business Essay

Communication is defined as the process of transferring information and meaning between senders and receivers, using one or more written, oral, visual or electronic channels. Simply put, communication is the exchange of information between people. It is important to get feedback from your audience and vice versa for the process of communication to take place effectively. The feedback can be either positive or negative. It is any communication used in an organization with an intention to promote a product, improve service or with the intention to make a sale. This type of communication also occurs within the organization between the management and employees. It has purpose and a lot of attention is given to the details. Business communication has undergone a lot of transformation as a result of the growth of information technology that has changed the whole concept of communication. In the past, businesses had a model of communication that left very little room for interaction and conversation with the receiver of the message. Currently the model that works and is now used by most organisations is one that gives room to both conversation and interaction with the receivers. Communication is very vital in any organization. Like blood in our bodies, it is the channel that gives life to the organisation and without it, organisations would not be functional. Effective communication plays a significant role in the success of the business, as communication works to send information, control behavior and motivate workers. Today there are many more ways to communicate than there were just a few years ago and access to communication devices is almost universal in most businesses. Good communication means the intended message that is send is received by a group of audience without any distortions in meaning. This definition applies to not only personal communication among friends or relatives, but to business situations where you may be communicating with a co-worker one-on-one or in a meeting with several or more people. The key here is clarity Communication is also almost instantaneous. Good business communication is simple and easily understood, a rule often overlooked by managers and team members. This is especially important when preparing a document, speech or presentation that is a game-changer for the company. Simple and concise language wins over language that is obtuse and hard to understand. Business communication defines most organizations, resulting in effective marketing campaigns, productive interpersonal relationships among co-workers and successful customer service resolutions. Since audiences demand different kinds of communications in different situations and settings, effective business communication professionals understand how to tailor messages for maximum results. Several communication challenges exist within day-to-day business operations, especially with technology. Technology benefits organizational communication by lifting communication restrictions caused by time and distance. At the same time, the removal of time and distance as communication factors has led to the challenges of information overload and constant accessibility. The issue of constant accessibility has led to blurring of the lines between personal and professional lives. There are several barriers: Emotion serves as an obstacle to effective communication, as emotion can interfere with making rational decisions. Differences in culture can be a communication challenge for international businesses. Not understanding the language and customs of other cultures can lead to poor sales and public relation disasters. There are a number of recognised barriers in the modern day communication, many of which go unnoticed, that can and do effect the standards of communication a person feels comfortable with. Physical barriers are often down to the nature of the environment in which communication may take place but are not always interpreted by the recipient in the correct manor. For example an office door being closed could signify to a co-worker that someone does not want to be bothered, or is possibly in a bad mood, whereas the occupant of the office could have possibly closed the door due to a breeze or didn’t close the door them self at all. This is an example of misinterpretation of actions brought about by the physical barrier of the door. Barriers like this can often present the risk of a ripple effect; in that the barrier in this situation could damage the recipients’ perception of the source by making the recipient feel outcast or shut out by the inhabitant of the office, which would set up the standings of a bad communicative relationship. Issues in communication can be disturbed when the basic mechanics of the communication method are damaged directly.

Reasons For Choosing A Career - 882 Words

Choosing a career has to be the hardest decision anyone can make. In order to find the right job for yourself you have to take a lot into consideration. The reason for that is because when you look into a career you need to be able to see yourself doing that job for the rest of your life.being a family therapist will probably be the career I go into because I would be able to help out families get through tough times. After reading the two articles it s become clear that searching for a job in this economy is difficult. In the article â€Å"U.S. Income Inequality Keeps On Rising,† by Robert B. Reich, he explains the different functions and the impacts that are happening in today s careers. Reich mentions how their is symbolic analytic services, routine production services, and routine personal services. Symbolic analytic services is when you work alone or in small teams and it usually consist of nice offices. Many people who work in symbolic analysis are usually known to be l awyer and investment bankers. People who work in symbolic analytic service are getting paid well and their future looks good because their job is always growing. He also mentions how Routine production and Routine personal services are known to do repetitive work.They get paid hourly and don t contain a college education. It’s known that it is better to have a college education because people who don t usually get replaced with people who do and it s known that if you work in routine productionShow MoreRelatedChallenges Students Face When Choosing A Career Essay1182 Words   |  5 PagesChallenges Students Face when Choosing a Career Today, choosing a career can be problematic especially within the new graduates, and the choice of career path is not always in our hands. 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