Sarbanese - Oxley Act of 2002

TABLE OF CONTENT

Title.............................................................................................. i

Dedication.................................................................................... .. ii

Abstract..........................................................................................iii

CHAPTER 1 : Introduction

1.1. The Background

1.2. Definition Of Sarbanes - Oxley (SOX).

1.3. The SOX Act.

CHAPTER 2: All SOX Addresses

2.1. Sarbanes- Oxley Effects

2.2 Index Of Sarbanes - Oxley 11 Sections.

2.3 The SOX Compliance.

CHAPTER 3: Focus Section 302

3.1

3.2. Title: Corporate Responsibility For Financial Report.

3.3 Penalties of non compliance.

3.4. Effects Of SOX on HealthSouth

CHAPTER 4: Summary

4.1 Conclusion

4.2 Bibliography

SARBANES - OXLEY ACT OF 2002.

DEDICATION

This term paper is dedicated to my one and only, Professor Fatony, Who had taught me that the world of Finance is so diverse, that I can make a lemonade out of a lemon in it, just by deciding and making it my duty to be the best I can be, in what ever my creator has ordained me to be.

ABSTRACT

This paper explains the Sarbanes-Oxley Act of 2002, which requires all companies to file periodic reports with the SEC, changes the responsibilities of directors and offices, and modifies the reporting and corporate government obligations of SEC-reporting companies. This paper explains that the Sarbanes-Oxley Act came about because of the bankruptcies of Enron, Global Crossing, Adelphia, and WorldCom. These companies had hidden their true financial health from creditors and shareholders until an inability to meet financial commitments forced them to restate earnings that revealed massive losses The paper points out that the business objective of the Sarbanes-Oxley Act (SOX) is to restore investor confidence in companies and markets. Table of Contents Introduction Background Accounting Problems that Led to Sarbanes-Oxley responsibilities, all what it addresses, the SOX act, its title, and compliance, focus title corporate responsibilities advantages. The paper concludes that, in the long run, the Sarbanes-Oxley Act may do little to increase the integrity of certified financial results and may only lead to an upswing in litigation

CHAPTER 1 : INTRODUCTION

The Sarbanes-Oxley Act of 2002 is the most far-reaching legislation affecting financial reporting, disclosure and internal controls since the Securities Act of 1933. For the first time CEOs and CFOs are required to certify in writing that not only are their financial disclosures complete and accurate, but that they have enacted "disclosure controls and procedures" to ensure reporting of material information affecting the company. In response to the recent corporate financial scandals involving Enron, WorldCom, and others, including their Auditing firms, the US Congress has stepped up efforts to rein in corporate malfeasance and restore faith in financial reporting.

The Sarbanes- Oxley Act of 2002 is landmark legislation designed to make public companies more transparent in their financial reporting and more proactive in sharing material information with other participants in the financial reporting chain, which includes auditors, audit committees, analysts and investors.

The Sarbanes-Oxley Act is a complex act with many provisions. The two sections most relevant to public corporations are Sections 302 and 404. Section 302 pertains to disclosure controls and procedures; Section 404 pertains to internal controls and procedures for financial reporting. Section 302 mandates that CEOs and CFOs personally certify financial statements and filings, as well as affirm that, they are responsible for establishing and enforcing disclosure controls and procedures at all levels of their corporation.

1.1 THE BACKGROUND

The Sarbanes-Oxley Act of 2002, sponsored by US Senator Paul Sarbanes and US Representative Michael Oxley, represents the biggest change to federal securities laws in a long time. This Act is named after its primary architects, Senator Paul Sarbanes and Representative Michael Oxley. The Act deal with issues of auditor independence, corporate responsibility, enhanced financial disclosures, conflicts of interest, and corporate accountability, among other things. The Act also establishes a Public Company Accounting Oversight Board. The collapse of Enron and WorldCom, as well as other well-publicized financial debacles, has led to an unprecedented level of attention paid to corporate governance, financial disclosure, and auditing issues. These conditions warranted US legislators to take a strong action to tighten the belts of erring corporate. In wake of the above conditions American Congress presented Sarbanes Oxley Act, 2002 to the President on July, 2002 after passing it in the senate by a 99-0 vote and in the house by a 423-3 margin. President Bush signed the Sarbanes Oxley Act, 2002 into law the morning of July 30 2002.

1.2 DEFINITION OF SARBANES - OXLEY (SOX)

What is the Sarbox Act or Sarbanes-Oxley Act ?

Sarbanes-Oxley is a US law passed in 2002 to