Sarbanes Oxley Act and Independence Responsibility View Research Paper

Sarbanes Oxley Act and Independence Responsibility View - Research Paper Example The scandals not only adversely affected the share price but also the general public lost trust on the securities market. Hence the Sarbanes Oxley Act was formed to increase the accountability of the public company so that in future such type of scandals can be avoided. In this project a detail analysis has been made on the Sarbanes Oxley Act and independence responsibility view. The US GAAP has also been analyzed in the view of the Sarbanes Oxley Act. The US companies prepare the financial statement as per the US GAAP but due to the enactment of this act the public companies has to give some more disclosure apart from GAAP. This project involves a detail analysis of the problems of the Sarbanes Act and the US GAAP. The study also includes how and to what extent the act has impacted to the investor, officers of the company, directors, members and other stakeholders. At the end recommendations have been made on how the problems of this act can be solved and investor’s interest can be protected. Brief Overview of Sarbanes Oxley Act of 2002 Sarbanes Oxley Act was enacted on July 30th, 2002. It increased the sanders to be maintained by all the public companies, its management and accounting firms.... It increased the sanders to be maintained by all the public companies, its management and accounting firms. The name of this law was given after the name of the US senator and US representative Paul S Sarbanes and Michael G Oxley respectively. This act has eleven main elements. They are as follows:- a) Public Company Accounting Oversight Board- This part contains nine sections. These are related to administration, establishment, audit, commission, accounting standards etc. This board also gives guidance on registration of auditors and also specifies the rules and procedures for conducting audit. b) Auditors Independence- This title mainly signifies the standards regarding the independence of the external auditors. It contains nine sections. These sections deals with the criteria for approval and preapproval of auditors, rotation of audit partners, audit reports and everything related to the auditors and their work. c) Corporate responsibility- This part contain eight sections which d eals with the company’s responsibility toward financial reports, forfeiture of profits and bonuses, audit committees of public company etc. As per this title the executives of the company should make sure that the financial reports are accurate and complete. It also signifies the penalties for non compliance of the guidelines. d) Enhanced financial disclosure- This part contains nine sections. This part signifies that the financial statements should also disclose those transactions which are not represented in the balance sheet. It also signifies the ethics to be followed by the financial officers. e) Analyst Conflicts of Interest- This part signifies the measures which should be taken so that the investor can trust the security analyst’s reports. It contains