Changes in reporting procedure Global-Outcome of frauds

Changes  - in Corporate governance-


The biggest change induced in the USA after Enron exposure was the Sarbanes-Oxley Act of 2002. The Securities and Exchange Commission of USA tightened grip on the way the companies had to report financial figures . The Sarbanes-Oxley Act consisted of eleven  different parts, but there are six main sections .

First, the CEO and CFO of the company have to certify in writing that their financial statements are filled out correctly to the best of their knowledge.

Secondly, the Public Company Accounting Oversight Board would  investigate and punish auditing 

firms that do not follow the Generally Accepted Accounting Principles.(GAAP)

The third gives the power to hire, fire, and compensate accounting firms that audit financial statements.

Fourth, more regulations on audit firms about staying away from business with conflict of interest.

Fifth, providing for internal control which will ensure that the shareholders and future investors with transparency  and  adequate and accurate disclosure.

Lastly, penalties up to 20 years in prison to anyone involved in altering or destroying any documents that might lead to the prosecution of a company.

The Sarbanes-Oxley Act changed the way corporate governance of public companies as well external auditors were engaged with corporations  and also established the Public Company Accounting Oversight Board, which promulgated standards for public accountants, limited their conflicts of interest and required lead audit partner rotation every five years for the same public company.

The legislative regulations equivalent to SOX in different countries are as follows
Japan-   Jsox-April-2008
Australia-CLERP 9 (Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004.       
Canada- Canadian Sarbanes-Oxley Act or C-SOX-Ontario, Canada-Bill 198-october 2003.
India -Clause 49-December 2005.
European Union-Euro-SOX-(The 8th EU Directive or the audit directive)
England-Combined Code of Corporate Governance-1998
Italy-Law 262/2005 -(The protection of savings and regulation of financial markets)-2005.
France-Financial Security Law of France July 2013-


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