SEC (2003) advised that “accurate and reliable financial reporting lies at the heard of our disclosure-based system for securities regulation, and is critical to the integrity of the U.S. securities markets,” and that examination of financial reporting procedures through the audit process is paramount in maintaining a sound exchange market (p. 4). Within the examples provided herein, these organizations failed to provide “accurate and reliable” financial data to the public, and deceived investors by portraying a picture of robust and healthy finances, which resulted in enormous financial losses for many (U.S. SEC, 2003, p. 4). In reaction, the public at large demanded swift action by the U.S. Government to effect change to safeguard the remaining and future investments of securities holders (Livingston, 2003, p. 8). The U.S. Government’s response was the swiftly orchestrated reform entitled the Sarbanes-Oxley Act, ratified in 2002 (Livingston, 2003, p. …show more content…
Within this paper, we will examine the impact on the highest level of governance within the corporation, specifically the board of directors appointed audit committee, as well as the changes realized by the outside independent audit firms. Additionally, we will address the main advantages and disadvantages of the Act and counsel on modifications to enhance the effectiveness of the Act. Lastly, we will discuss the merits of legislations [ability/inability - tbd] to enforce financial statement