Research the Sarbanes-Oxley act of 2002 and briefly discuss the materiality implications in the Act to managers of business entities. (2) What demands does the act put on managers to detect and...

Research the Sarbanes-Oxley act of 2002 and briefly discuss the materiality implications in
the Act to managers of business entities. (2) What demands does the act put on managers to
detect and prevent material control weaknesses?
Sarbanes Oxley Act:
The wave of financial scandals in 1990‟s and 2000 „s left a question on the reliability of
the financial statements of the corporates along with the regulating corporate governance and the
accounting profession of the country. The investors got highly concerned about the scandals,
with this the investors lost all the faith and confidence on investment which smashed the stock
market.
After different scandals that took place in United States concerning different companies
such as Enron, WorldCom, Tyco etc., the government of America enacted the Sarbanes-Oxley
Act in the year 2002 which focused on protection against accounting frauds and different
financial malpractices. With the announcement of Sarbanes Oxley act on July 25
th
‟ 2002, the
stock market indices of the large capitalization stocks had fallen down by 40 percent.
Materiality Implications:
The Sarbanes Oxley is the act which focuses to fixing different auditing effects of the US
organization. The main focus of this act is brings accurate and reliable picture of the company.
The companies need to present its financials accurately. The act focused on the accuracy of the
financial...