Sarbanes Oxley Memo - 1410 Words

Ancher Public Trading TO: Board of Directors FROM: Learning Team A consultants DATE: August 22, 2005 SUBJECT: Sarbanes-Oxley recommendations As consultants for Ancher Public Trading (APT), Learning Team A would like to discuss the implications of the Sarbanes-Oxley (SOX) legislation. This memorandum provides a brief history of SOX ¡Ã‚ ¦s creation, explains the relationship amongst the FASB, SEC and PCAOB, describes the pros and cons of SOX, assesses the impacts of SOX, and lists ethical considerations of SOX. History of SOX - the Sarbanes-Oxley Act of 2002 is legislation in response to the high profile financial scandals, such as seen with Enron and WorldCom. The purpose of this act is to protect shareholders and the general†¦show more content†¦C.) Impact of SOX  ¡V The act has immediate and profound implications for the behavior and responsibilities of external auditors, management and the audit committee. Plus, even though nothing is explicitly required of internal auditors by SOX, the legislation will change their role within the firm.  ¡Ã‚ §The act can be seen as an attempt to change the environment in which contracts are written and private behavior occurs. ¡Ã‚ ¨ (Linsley, 2003). The following three points of SOX are examples of the changes: 1) Ensure that the audit committee and the auditors are more independent. 2) Increase the consequences to the audit committee and the auditors if they submit incorrect reports. 3) Make management formally recognize and accept responsibility not only for the financials, but also for the internal control system. People have said these things are starting to filter down to smaller, non-public companies, Banks are requiring different standards for corporate governance which has increased as a direct result of Sarbanes-Oxley. People have started talking about spending more for internal controls, software, having to hire more auditors and higher DO [directors and officers] insurance. (Leport 2005) Many improvements in financial transparency of companies are a direct result of the implementation of SOX. According to R. Kulzick of St. ThomasShow MoreRelatedWhistle-Blowing: Enron Essay1352 Words   |  6 Pagesthat became a whistle blower in 2001. She sent an anonymous memo to Enron Chairman Kenneth Lay regarding the misstatements on the financial report. Enron hired lawyers from Vinson Elkins to do an investigation on the financial misstatement allegations (Ackman, 2002). According to the memo from the investigations, after Watkins identified herself Lay held a meeting with her to discuss about her concerns regarding her allegations. The memo failed to indicate what Lay told Watkins. 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