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Sarbanes Oxley Act Essay

313 words - 2 pages

2.4 Impact:
Sarbanes Oxley Act has had many positive impacts on American businesses, but has also had its share of criticism. As a result of the implementation of the Sarbanes Oxley Act, firms now produce financial information that is more transparent and holds some form of accountability. One of the greatest benefits of the Sarbanes Oxley Act is that investors are more confident because they now have access to more accurate financial statements and are able to assess the financial strength ...view middle of the document...

Sarbanes Oxley has helped to reduce the number of fraudulent financial / accounting activities in publicly traded companies and has also forced companies to have stronger internal controls, which results in more reliable and accurate financial statements.
Although Sarbanes Oxley has had a number of positive results on American businesses and investors, several firms resent the act and its impact on their companies. Many executives and managers of such companies complain about the costs associated with being in compliance with the act. These additional costs include time and expenses for external auditors, legal fees, additional employees / compensation fees, fines for non-compliance, etc. They often argue that the cost of compliance exceeds the benefits of the act, which is pointless. Opportunity costs are also incurred as many companies have been spending more time and money on compliance issues rather than strategic planning and growth. According to a survey taken by CFO Magazine, “33 percent of respondents say they've delayed or canceled projects as a result of Sarbanes-Oxley”. Other companies have chosen to not be listed on the US exchange to avoid the high costs of operating a publicly traded company in the US due to the Sarbanes Oxley Act.

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