On Tuesday, July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002 (SOA), one of the most extensive revisions of the federal securities laws in the last 60 years. The Act, which applies in general to publicly held companies and their audit firms, dramatically affects the accounting profession. It impacts not just the largest accounting firms, but also any CPA actively working as an auditor of, or for, a publicly traded company. The SOA was passed in response to the epidemic of corporate scandals (most resulting in bankruptcies) and accounting abuses at public companies. It has been designed to crack down on securities fraud, ?boardroom scandals? and tighten the regulation of accounting rules. This newly endorsed ruling includes stiff penalties for improper company reporting, corporate disclosure and auditing practices, including record keeping.
The dynamics of the need for such legislation will be talked and written about for years to come. On December 2, 2001, less than a month after it acknowledged accounting errors that inflated their earnings (by almost $600 million since 1994), the Houston-based energy trading company, Enron Corporation, filed for bankruptcy protection. At the time, it was the 7th largest corporation
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