Sarbanes-Oxley Act

The article I found spoke about how the Sarbanes-Oxley Act (SOX) generated because of the accounting scandals across the United States in the years previous to 2002. The SOX was signed and originated on July 30, 2002 by President George W. Bush. It contains eleven sections/titles that small and large businesses must abide by and follow in their day to day business transactions and record keeping. Due to the lack of accounting regulations, along with corporate business scandals, the SOX Act was put into place. Those who invested into either pension or trust funds within the capital market system, were subjected to millions of dollars in losses to these same corrupt acts. The SOX was enacted to provide change in the practice and regulation of accounting and auditing. Since SOX is a federal law, state to state regulations must apply their provisions to correspond to the SOX titles/sections.

The SOX act requires that corporations maintain good standing financial records, which is much different from what was required in the past. Companies have to establish a system of internal controls for financial reporting to take place. Managers are then to prepare quarterly statements which would assess the strengths and weaknesses of controls. Additionally, there is the use of outside accounting agencies to conduct independent assessments of the in-house controls and will report any faults or fraudulent acts that take place.

With 90 sections and 300 laws, there is much information for corporations to sort through and to fully interpret how they apply to their specific corporation. Those who choose to disregard these laws, face stiff penalties and huge monetary fines. Prison for as much as 20-years can be placed onto those seeking to commit corrupt acts. And for those seeking to shed light onto the corrupt practices, special provisions have been put into place for those 'whistle blowers'.

The SOX applies to my current job because I work for a private owned franchise for McDonald's. Although we own eleven locations, we still have to adhere and answer to the corporate McDonald's about profits and money usage. Even though we are a private own franchise, we are renting the name and products of McDonald's. If accounting information is done incorrectly, my management team could possibly get in trouble for that. Since SOX has to be improvised in state-to-state regulation, it is very important we as a company abide by the SOX and become knowledgeable in what it requires.

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