The Sarbanes-Oxley Act (SOX) was created for the protection of investors by improving the accuracy and reliability of corporate disclosures that are pursuant with securities laws. It called for punishment of behaviors that could lead to a corporate accounting scandal such as those seen with corporations such as Enron, WorldCom, and Global Crossing (Kecskes 2016). The Act came to pass on July 30, 2002 to help ensure that corporations and their accounting firms were being held accountable for the details presented in their financial reporting and imposing financial and criminal sanctions on those that participate in fraudulent behavior (Wilbanks 2016). This was during a time where the public’s confidence in corporations had faltered, and the government had to take measures to restore this confidence and undue losses to shareholders from the fraud that is present in some companies. With proper analysis and study, an organization should find it easy to comply with regulations set forth by SOX so that there won’t be any undo consequences for noncompliance with the rules.
According to Wilbanks (2016), SOX has 11 components that include: 1) Public Company Accounting Oversight Board, 2) Auditor Independence, 3) Corporate Responsibility, 4) Enhanced Financial Disclosures, 5) Analyst Conflicts of Interest, 6) Commission Resources and Authority, 7) Studies and reports, 8) Corporate and Criminal Fraud Accountability, 9)White-collar Crime Penalty Enhancement, 10) Corporate tax returns, and 11) Corporate Fraud and Accountability. Some key provisions of the SOX Act are the creation of the Public Company Accounting Oversight Board that has the power to set auditing, quality control, and ethical standard. They also have the authority to inspect accounting firms, conduct investigations, and take disciplinary actions. Another key provision is the increased auditor independence requirement that increases the separation between a company’s attestation and non-attestation activities. There is also enhanced corporate government requirements under SOX that requires the board of every organization to maintain an audit committee that is responsible for the hiring and overseeing external auditors (Hall 2007).
Romans 13:1 says, “Let every person be subject to the governing authorities. For there is no authority except from God, and those that exist have been instituted by God.” From a biblical perspective, it can be inferred that rules are necessary. As believers of his Word in business, we must follow all rules and regulations that are set forth for our organizational industry because God has instituted rules for us in all things that we do. Luke 16:17 says, “But it is easier for heaven and earth to pass away rather than for one dot of the Law to become void.” Because God allows rules and regulations to be created and implemented, we must 100% comply with these laws to show ourselves worthy in God’s sight and as Christian business leaders.
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