The Impact of SarbanesOxley Act

The Sarbanes-Oxley Act was the consequential integration of two parallel financial reform bills advanced by Sen. Paul Sarbanes of Maryland and Rep. Michael Oxley of Ohio that correspondingly aimed at curbing the accounting practice accesses witnessed by large corporations in the US and internationally. Rep. Oxley bill was considered modestly pro-business with non-stringent regulations, however, Sen. Sarbanes was more substantial in its reform agenda and may not have sailed through at other times but the ensuing WorldCom scandal tilted public opinion heavily against corporate executives thus was passed 97-0 in Congress (Murray, 2002). (Hilzenrath et al, 2002).At the signing of the act in July 2002, President Bush proclaimed it as the most momentous legislation with the most far-reaching reform of American business practices since the time of Franklin Delano Roosevelt. (Whitehouse.gov, 2002). The Securities Acts of 1933 and 1934 initiated by President FDR were also critical at that time in regulating the stock exchange and restoring investor confidence after the Great Depression plummeting of stocks that can be likened to the current global financial crisis.Although the Sarbanes-Oxley Act of 2002 heralded a new era of transparency and responsibility for accounts reporting, it was also the harbinger for escalated expenditure, confusion and antipathy by corporate executives as the guidelines necessitated costly outlays and less flexibility and financial dexterity (Bisoux, 2005). Nonetheless, Bisoux (2005) asserts that SOX has forced many corporate executives to abandon the what-you-don’t-know-can’t-hurt-you approach at managerial levels to an honesty-is-the-best-policy (p. 25).