From the course: Finance and Accounting Tips

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Sarbanes-Oxley and internal controls

Sarbanes-Oxley and internal controls

From the course: Finance and Accounting Tips

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Sarbanes-Oxley and internal controls

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- Enron declared bankruptcy in December 2001 amid accusations of accounting fraud. Congressional consideration of the need for enhanced regulation of the accounting industry was given an additional jolt when WorldCom, which was subsequently purchased by Verizon, announced its accounting-related bankruptcy in July of 2002. In short order, the US Congress passed the Sarbanes-Oxley Act of 2002. This act is often referred to by those in accounting and the finance world as SOX. It is also referred to by other names, but we're not going to go there. To accountants, the Sarbanes-Oxley Act includes a host of interesting provisions. the creation of the PCAOB, that's the Public Company Accounting Oversight Board. New funding arrangements for the FASB. Revised rules on auditor-client relationships and a new requirement that a company's CEO and CFO personally vouch for the fairness and reliability of the financial statements. But the section of Sarbanes-Oxley that has the biggest impact is…

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