Purpose of Sarbanes Oxley

In the wake of the Enron and Worldcom scandals, the Sarbanes Oxley Act was created to inspect and monitor companies in an attempt to protect shareholders and investors of the companies.

The purpose of the Sarbanes Oxley Act is to keep large companies from financial fraud and misleading it's stockholders and investors. Essentially, it is there to protect the investors. The Sarbanes Oxley Act will protect investors from losing their investment unfairly or being misguided into investing in a certain company.

The Securities and Exchange Commission makes sure that companies report and file their documents correctly and timely, again to prevent misleading or inaccurate financial status. Company executives will have to certify that these records are accurate and monitor disclosures. For example, the Sarbanes Oxley Act will try to prevent scams
such as the Enron and Worldcom scandals.

There are three main points to the Sarbanes Oxley Act that affect the management of records. The first point deals with destruction and falsification of records. If anyone attempts these acts or trys to obstruct the investigation, that person will face fines and imprisonment. Also, companies must follow set guidelines regarding communications recording, audits, records etc. Although the Sarbanes Oxley Act was intended to protect investors and keep large companies from fraudulent behavior, it has put some unintended burdens on smaller companies, making it harder for them to progress and prosper.
 

 

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