A Primer on Sarbanes-Oxley

A Primer on Sarbanes-Oxley

Question 1

Strong reaction to the financial scandals, the Sarbanes-Oxley Act rules of the exchange corporate governance to restore the confidence of the investors by Reinforcing the reliability of financial information by giving managers and sense of responsibility. Although there are French laws as regards corporate governance, the extraterritoriality of the Sarbanes-Oxley Act forces, the French companies quoted in the United States to in accordance to it . If the Legitimacy of this law is not Called in question, the cost of the compliance of the Sarbanes-Oxley Act Many causes reflections. In the long term, new thesis will règlements Ensure the perenniality of the companies as well as the return of confidence of the investors. In the United States, the Sarbanes-Oxley Act, passed in 2002 under the Bush administration, establishes strict standards for restoring the confidence of shareholders and other donors. It fundamentally changes the rules of governance to ensure the reliability of financial information provided to investors. In this sense, the law Sarbanes-Oxley itself as a turning point in the history of governance. Corporate governance is thus faced with a double challenge: to create value to shareholders and reduce the risks inherent in relations between the different stakeholders. The Sarbanes-Oxley applies to all listed companies in the United States to regain the confidence of investors. This obligation includes French companies listed in the United States but also subsidiaries based in France of foreign companies listed in the United States. It should then know the real issues of compliance with U.S. law for these companies (Shakespeare, 2008).

SOX has introduced strict rules aimed at strengthening the independence of auditors, heavily questioned in the various cases. Among the various provisions of the legislation to increase independence, including the prohibition found for audit firms to provide public companies they audit services related to non- the audit. Are prohibited among other bookkeeping services, design and implementation of financial information systems, services outsourcing or internal control management functions or human resources. Another element to limit conflicts interest is mandatory rotation of partners responsible for a particular audit at least every five years. The law also requires accounting firms to wait a year to provide audit services to companies where their former employees in certain occupations strategic.

The Sarbanes-Oxley Act, adopted on 30 July 2002, establishes new rules to reform accounts of listed companies and to protect investors. Rules that will be discussed in this trial concerning reforms to enhance the independence of auditors, heavily questioned following the scandals. The enactment of SOX, developed by Congress is short enough as it establishes the rules without making any explanation or present the fundamental reasons that could justify their adoption. To find explanation of these rules, we must refer to the clarifications and interpretations conducted by the SEC.

In May 2003, a few months after its promulgation as required by Directive Section 208 (a) of the Act, the SEC intervened to issue a new set of rules to modify, strengthen and clarify the principles governing ...