In six pages this paper discusses the reasons behind this accounting legislation and also assesses the Act's advantages and disadvantages. Three sources are cited in the bibliography.
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Adding insult to injury, laws were already on the books to prevent situations such as Enron from happening, yet they didnt deter the companys downfall
- in fact, Enrons senior management had showed a remarkable disregard for following any type of law. Because of this disregard - and to help restore badly shaken investor confidence
-- Congress passed the Sarbanes-Oxley Act of 2002, an act to address corporate reform. While the Act never targeted Enron specifically, it is widely understood that passage of the act
was geared to send a message to Enron corporate executives - namely, cheaters never prosper. But whether the act will deter another Enron remains to be seen. Accounting Problems
But the Act is supposed to do more than send a message - Democrat Senator Paul Sarbanes of Maryland, who co-drafted the Act, wrote
provisions creating new regulatory initiatives directed toward stopping fraud from occurring at all, rather than dealing with it after it has occurred (Leahy, 2003). Fraud, in this case, was meant
to implicate Arthur Andersen, a company that had deliberately obstructed justice by attempting to shred evidence accusing Enron of wrongdoing (Leahy, 2003). Also
included in this Act is criminal provisions that aimed at preserving evidence of fraud (Leahy, 2003). This means that CPAs and auditors actively working with or for publicly traded companies
will be dramatically impacted by the act (Texas Society of Certified Public Accountants, 2002). Why did this act come about in the
first place? For one thing, Enron had been perpetrating fraud for years through its dishonest accounting methods. Although much of its accounting and audit functions were in accordance with Generally