At the beginning of this millenium several economic scandals like Enron or WorldCom shocked the US economy and the stock exchanges around the world. To restore the trust of the investors the US government enacted the Sarbanes-Oxley Act. This act increased the demands on the financial reporting of companies registered at the US Securities and Exchange Commission. This act possibly changed also the accounting measurement practices that are less conservative in the US than in other countries.
This assignment analysis if the accounting measurement practices changed to a more conservative accounting after the enactment of the Sarbanes-Oxley Act. This analysis is mainly based on section 404 of this act. Beyond that the assignment gives an overview about the Sarbanes-Oxley Act itself and the value of conservative accounting.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- The History of SOX
- Overview about SOX
- Title I - Public company accounting oversight board
- Title II Auditor independence
- Title III Corporate Responsibility
- Title IV Enhanced financial disclosures
- Titles V to XI
- Implications of Section 404
- Content of the internal control report
- The COSO framework
- Relevance of SOX for conservative accounting
- Overview about conservative accounting
- Analysis of conservative accounting
- Conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This assignment aims to analyze whether the enactment of the Sarbanes-Oxley Act (SOX) shifted accounting measurement practices towards a more conservative approach, particularly focusing on Section 404 of the act. It also provides a comprehensive overview of the SOX and the significance of conservative accounting.
- Impact of SOX on accounting measurement practices
- Analysis of Section 404 of SOX
- Overview of the Sarbanes-Oxley Act
- Value of conservative accounting
- Internal control reporting and the COSO framework
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: This chapter provides a brief introduction to the topic of the assignment and highlights the importance of the Sarbanes-Oxley Act in restoring investor confidence after corporate scandals like Enron and WorldCom.
- The History of SOX: This chapter explores the historical context leading to the enactment of the Sarbanes-Oxley Act, emphasizing the motivations behind its creation and the need to address accounting and corporate governance issues.
- Overview about SOX: This chapter provides a comprehensive overview of the Sarbanes-Oxley Act, outlining its key sections and their respective objectives. It delves into specific titles like Title I, Title II, Title III, and Title IV, explaining their significance and implications for corporate governance and financial reporting.
- Implications of Section 404: This chapter focuses on the implications of Section 404 of the Sarbanes-Oxley Act, which mandates internal control reporting by public companies. It explores the content of these reports and the role of the COSO framework in establishing and assessing internal controls.
- Relevance of SOX for conservative accounting: This chapter examines the relationship between the Sarbanes-Oxley Act and conservative accounting. It provides an overview of the concept of conservative accounting and analyzes its relevance in the context of SOX, particularly in light of Section 404.
Schlüsselwörter (Keywords)
This assignment centers around the Sarbanes-Oxley Act (SOX), particularly Section 404, and its potential impact on accounting measurement practices, specifically towards a more conservative approach. Key concepts include internal control reporting, the COSO framework, conservative accounting, and the relevance of these concepts to the SOX framework.
- Quote paper
- BBA Denis Stein (Author), 2012, The Sarbanes-Oxley Act - Accounting and Conservatism, Munich, GRIN Verlag, https://www.grin.com/document/202857
