Senator Paul Sarbanes and his co-conspirator Representative Michael G. Oxley had put forward the Sarbanes-Oxley Act in the Congress. It was specifically drafted to protect the rights and interests of publicly trading organizations and their investors. The act itself is spread over eleven topics that specify the directives and obligations that constitute fiscal coverage.
The first topic concerns itself with the establishment of the PCAOB i.e. Public Company Accounting Oversight Board. Based on 9 sections, this topic describes the agency as a prevailing body that looks over the procedural auditing plus accounting services provided by different public auditing firms. The PCAOB also ensures an organization’s compliance to quality, authority and regulatory controls established by federal law.
The second topic also consists of 9 sections specifying the rules for external audit procedures. This topic explains the rights and requirements for hiring a new auditor along with audits that are related to partner alternation. Auditing firms are also required to limit their services to audits and supervision refraining from offering consultation to the same applicant.
This topic has 8 sections which describe the responsibilities rested on managerial personnel shoulders. These personnel have to ensure the on-time delivery of financial documents and presentations to auditing firms.
The fourth topic presents improved coverage requisites for monetary transactions. This may include transactions conducted away from the balance sheet and stock markets and paper figures of business representatives.
Based on a single section, this topic contains information about restoring investor trust. The section also requires security analyst to disclose full information any visible conflicts that relate to interests.
The sixth topic is based on the SEC’s rights to make sure that all company or managerial personnel who fail to adhere to the rules and regulations of the Sarbanes-Oxley Act are expelled from the best practice services.
Spread over 5 sections, this topic makes performing studies and filing reports mandatory for the Securities and Exchange Commission including the United State’s Comptroller General.
This 7 sectioned topic contains information regarding the punishments and fines posted on companies and individuals who do wrong. Providing falsified information to auditing firms and assisting in such processes is considered one of the prime acts of criminality.
All 6 sections of this topic are dedicated towards curbing the crimes and fraud activities of the white collar community. It also provides the laws used for punishing such offenders.
Constituted of a sole section, this topic explains the tax return policy responsibilities of CEO residing in a particular organization.
This topic provides 7 seven sections of instructions regarding company criminal offenses. These may include the fiddling of financial files of an organization and the resulting penalties that the SEC can enforce.