An Act To protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes. There are also a number of provisions of the Act that also apply to privately held companies, for example the willful destruction of evidence to impede a Federal investigation. Oxley was named after sponsors U. As a result of Compliant mechanisms howell pdf, top management must individually certify the accuracy of financial information.
In addition, penalties for fraudulent financial activity are much more severe. Also, SOX increased the oversight role of boards of directors and the independence of the outside auditors who review the accuracy of corporate financial statements. PCAOB, charged with overseeing, regulating, inspecting, and disciplining accounting firms in their roles as auditors of public companies. America is above or beyond the law.
Debates continued as of 2007 over the perceived benefits and costs of SOX. Opponents of the bill have claimed it has reduced America’s international competitive edge against foreign financial service providers because it has introduced an overly complex regulatory environment into US financial markets. America’s financial sector is losing market share to other financial centers worldwide. Proponents of the measure said that SOX has been a “godsend” for improving the confidence of fund managers and other investors with regard to the veracity of corporate financial statements. It also creates a central oversight board tasked with registering auditors, defining the specific processes and procedures for compliance audits, inspecting and policing conduct and quality control, and enforcing compliance with the specific mandates of SOX. Title II consists of nine sections and establishes standards for external auditor independence, to limit conflicts of interest. It also addresses new auditor approval requirements, audit partner rotation, and auditor reporting requirements.
It defines the interaction of external auditors and corporate audit committees, and specifies the responsibility of corporate officers for the accuracy and validity of corporate financial reports. It enumerates specific limits on the behaviors of corporate officers and describes specific forfeitures of benefits and civil penalties for non-compliance. Title IV consists of nine sections. It requires internal controls for assuring the accuracy of financial reports and disclosures, and mandates both audits and reports on those controls.
It also requires timely reporting of material changes in financial condition and specific enhanced reviews by the SEC or its agents of corporate reports. Title V consists of only one section, which includes measures designed to help restore investor confidence in the reporting of securities analysts. It defines the codes of conduct for securities analysts and requires disclosure of knowable conflicts of interest. Title VI consists of four sections and defines practices to restore investor confidence in securities analysts. It also defines the SEC’s authority to censure or bar securities professionals from practice and defines conditions under which a person can be barred from practicing as a broker, advisor, or dealer.
SEC to perform various studies and report their findings. It describes specific criminal penalties for manipulation, destruction or alteration of financial records or other interference with investigations, while providing certain protections for whistle-blowers. Title IX consists of six sections. It recommends stronger sentencing guidelines and specifically adds failure to certify corporate financial reports as a criminal offense.
Title X consists of one section. Title XI consists of seven sections. It identifies corporate fraud and records tampering as criminal offenses and joins those offenses to specific penalties. It also revises sentencing guidelines and strengthens their penalties. This enables the SEC to resort to temporarily freezing transactions or payments that have been deemed “large” or “unusual”. The analysis of their complex and contentious root causes contributed to the passage of SOX in 2002. The Senate Banking Committee undertook a series of hearings on the problems in the markets that had led to a loss of hundreds and hundreds of billions, indeed trillions of dollars in market value.