Advantages and disadvantages of the Sarbane-Oxley Bill and theDodd-Frank BillAdvantages and disadvantages of the...

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Accounting

Advantages and disadvantages of the Sarbane-Oxley Bill and theDodd-Frank Bill

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Solution The SarbanesOxley Act SOX was enacted to protect investors from potential fraudulent accounting by companies whereas the DoddFrank Act was passed to enact significant financial reform to reduce risk in certain areas of the economy SOX was passed by Congress in response to large corporate accounting scandals at Enron Tyco International and WorldCom that were uncovered in the early 2000s DoddFrank was enacted in response to the 2008 financial crisis The SarbanesOxley Act SOX mandated a number of reforms relating to increasing corporate responsibility more transparent financial disclosures and to protect investors against corporate and accounting fraud Section 302 of SOX requires that management certify the information contained in financial disclosures Section 404 requires corporate management and their auditors to maintain internal controls with appropriate reporting methods Fraudulent accounting scandals caused large and complex bankruptcies for Enron and Tyco These scandals put thousands of people out of jobs and cost stockholders billions in share value The DoddFrank Act DoddFrank required significant reform in areas of regulatory regimes swaps trading derivatives valuation and corporate See Answer

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