Sarbanes-Oxley Act Essay Example

Sarbanes Sarbanes-Oxley Act Essay Sarbanes-Oxley Act Essay Sarbanes-Oxley Act, signed into law by President George Bush on June 30, 2002, was crafted in order to improve securities legislature and to strengthen the requirements of audit checks. The act appeared in response to a string of corporate scandals and was meant as a reaction to these scandals. The article â€Å"Private Companies Feel Effects of Sarbanes-Oxley† by Thomas Hoffman concentrates on the effect the implementation of the act had on private companies. In essence, the law was meant to address issues of corporate fraud at publicly traded companies, but now the private companies are beginning to feel the impact as well. This is true in particular with reference to the so-called whistle-blowing provision that requires that â€Å"employees must be given the means to anonymously notify federal regulators or corporate audit committees of any potential wrongdoing within their companies† (Hoffman, 2003). The companies will have to adapt their internal computer systems to the need to provide confidential information. In addition, private companies considering incorporation will then have to meet all the requirements for public companies, including the costly compliance with Section 404 that requires companies to improve their internal controls and to report their adequacy in an annual report confirmed by auditors. Some private companies have already begun to update their internal controls in accordance with Sarbanes-Oxley. Thus, Fred Pauls, corporate records manager at J.R. Simplot Co. in Boise, Idaho, reports that their company â€Å"last year began indexing its purchase-order system so the application meets Sarbanes-Oxleys record-keeping requirements† (Hoffman, 2003). Besides, the prospect of an acquisition motivates a private company to strengthen internal controls to meet the requirements of the acquiring public company, states Jocelyn Arel, a partner in Testa, Hurwitz Thibeault LLP (Hoffman, 2003). Hoffman, T. (2003, August 4). Private Companies Feel Effects of Sarbanes-Oxley: Financial reporting law could force IT changes even at nonpublic businesses. Computerworld. Retrieved January 14, 2006 from computerworld.com/printthis/2003/0,4814,83672,00.html.