Sarbanes Oxley Paper - SOX Article Analysis Running head:...

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SOX Article Analysis 1 Running head: IMPACT OF SOX ACT ARTICLE ANALYSIS Impact of SOX Act Article Analysis Jahde Goncalves University of Phoenix August 25, 2009
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SOX Article Analysis 2 Abstract Corporate environments are continually changing with one exception – fraud. With particular reference to public organizations, fraud has been cited as the number one cause of loss of company funds. Losses occur either through misappropriation of funds or assets, or the exploitation of poor or lack of internal controls within the company. In 2002, this was addressed when legislation was passed in the United States by the federal government by passing the Sarbanes-Oxley Act (SOX). “ The Act was passed in response to several high-profile corporate scandals, most notoriously the Enron scandal of 2001”. (Law & Smullen, 2008). SOX focus on four areas: corporate governance, regulating external auditing, confidential reporting of financial statement fraud by employees, and internal control over financial reporting. (Boyd, D., & Hurley, D.A. (2007). The objective of SOX is to make company audit committees, the auditing profession, and corporate management work together to reduce the risk of these types of scandals recurring (McDonnell, 2004). The document investigates the impact of internal controls and the use of auditing around and through computers on the Ferotik Inc. organization.
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SOX Article Analysis 3 Impact of SOX Act on Internal Controls Searching for the correct internal controls to implement can be a daunting task. A positive starting point toward compliance with Sarbanes-Oxley Act (SOX) of 2002 is to search for literature on the subject to gain insight. One valuable article that has contributed toward clarifying the SOX Act’s (Section 404) requirements is named “SOX 404: How do you control you internal control?” written by Byington & Christensen, (2005). The article addresses some of the key areas that form a requirement of the internal controls requirement and include items such as Management Considerations, Independent Auditor Considerations and Controlling Internal Controls. Importantly, the suggestions in the article center on the control environment because “(1) it will set the tone of the company, (2) it will influence the control consciousness of the individuals within the company, and (3) it is the bases for all other aspects of internal control” Management considerations
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Sarbanes Oxley Paper - SOX Article Analysis Running head:...

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