Sarbanes Oxley Act: The Unintended Consequences and Financial Restatements

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Sarbanes Oxley Act: The Unintended Consequences and Financial Restatements

July 30, 2022 BUSINESS & ECONOMICS 0

The goal of the current study was to make up for the poor governance that led to the financial crises including Tyco, WorldCom, and Enron. In addition to identifying what businesses can and cannot do, the Sarbanes Oxley Act also holds corporate management accountable for corporate governance. This essay makes the case that the Sarbanes Oxley Act has given investors a new lease on life and restored their faith in the US financial industry. The Sarbanes Oxley Act tends to lessen corporate failures, audit failures, and a long list of financial restatements that for years rocked the corporate world, the financial market, and stoked widespread public resentment and skepticism. According to the new norm, the auditor’s opinion must mention the Board’s authority. Before the Sarbanes Oxley Function, auditors were subject to a self-regulatory framework that did not protect their capacity to act impartially and independently as watchdogs. Through a combination of regulations and oversight that address conflicts of interest on the investor side and a lack of accountability on the corporate side in order to improve corporate governance, the Sarbanes-Oxley Act is signed into law in order to restore investor confidence in public and financial markets. The Sarbanes Oxley Act has improved the internal control environment for businesses. The information provided to investors, who would rely on published financial accounts to make wise investment decisions, will be more accurate and trustworthy as a result.

Author(s) Details:

Kingsley Wokukwu,
Department of Business, Stillman College, Royal Super, Sonics Enterprises, US.

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Keywords: Unrelated Business Income Tax (“UBIT”), corporate sponsorships, tax-exempt organizations, qualified sponsorship payments


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