International business: Sarbanes Oxley act

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International business
The Sarbanes-Oxley act of 2002 enacted in July had profound influence on the progress of the convergence of international accounting standards. The act set new standards for management of public companies and public accounting firms in United States. Following the rise of accounting scandals such as Enron, Adelphia, Peregrine Systems, Tyco International and WorldCom, U.S. senators Michael Oxley and Paul Serbanes sponsored this act (Green, 2004 pg103). Upon its enactment, agencies such as Public Company Accounting Oversight Board (PCAOB) were created. The board was charged with the responsibility of inspecting discipline issues in accounting firms. Other responsibilities that PCAOB has are to oversee and regulate the activities of accounting firms. The board specifically deals with financial aspects of public companies.
Apart from creation of agencies such as PCAOB, the act also deals with issues like auditing independence and enhanced financial disclosure. PCAOB protects the interests of people who invest in public companies. It provides investors with accurate independent audit report of various public companies. PCAOB introduced a number of rules that guide the public companies. Some of the rules are that public companies should meet financial reporting mandates. This means that these companies should file financial reports by the end of any year. Smaller or foreign companies must also do the same. PCAOB sets the deadline and expects all public and foreign companies in U.S. to comply. The act further requires that financial records, whether electronic records or massages should be saved for a minimum of five years. To ensure that all public companies adhere to these regulations, PCAOB has heavy fines to be paid by those who fail to compl...