Sarbanes-Oxley Act of 2002 Essay Example | Topics and Well Written Essays - 250 words - 1

Sarbanes-Oxley Act of 2002 - Essay Example domain companies are demanded to set internal control structures to guarantee the quality and accuracy of financial reports in red bout to enable investors make informed decisions on which investments decisions they should undertake. Public companies are therefore needed to have self-employed person board of directors to provide oversight and develop and assess internal controls systems.Secondly, the act has stipulated the standards and manner in which auditors should prevail their mandate by ensuring that their independence is not impaired and that members of the audit engagements do not have fighting of interests (Pain & Karmakar, 2007). It further restricted audit firms from providing non audit services that are likely to interfere with their objectivity.In addition, the act has placed the responsibility of ensuring accurate and complete financial reports on of age(p) management. The act specifies the responsibility of senior managem ent on the validity and accuracy of the financial reports and outlines the interaction between board audit committees and the remote auditors. Moreover, Sarbanes Oxley highlights the enhanced financial disclosure requirements for the financial results (Pain & Karmakar, 2007). Public companies are required to disclose off repose sheet transactions and beef their reporting. Significant changes in the assumptions and conditions should further be disclosed.Likewise, the act mandates security analysts, directors and auditors to harbour their conflict of interest before accepting to provide financial services to public companies. Equally stipulated in the act are the penalties preferred for destruction, manipulation and alteration of financial records with an objective of misleading the public in order to make financial gains. It recommends sentencing and incorporates failure to certify financial reports as an