It should also be mentioned that the provisions under Sarbanes-Oxley are not universally welcome by accountants and managers. While some of the measures were inevitable, they also impose additional encumbrances on the business corporations. For example, a systematic study of managers’ opinions elicited mixed reactions.
“The interviewees unanimously agreed the legislation has many good aspects. Specifically mentioned as a good idea was the part of section 302 requiring top management to certify it had reviewed each quarterly and annual report. Furthermore, requiring management to certify that the financial statements–and other financial information included in the reports fairly present the issuer’s financial condition, as well as the results of operations, will force management to become more engaged in the financial reporting process.” (Moberly, 2007)
While there are more plusses than minuses, it would be premature to conclude that Sarbanes-Oxley has achieved its stated purpose. One should not expect the Act to be a panacea for improving financial reporting. It would be unreasonable to expect that fraud would be eliminated from Corporate America. Only in another five years’ time would researchers have enough time and data to perform longitudinal studies of the legislation’s effectiveness. The act can been deemed a success even if it reduces the magnitude of corporate crime (Green, 2005). In other words, making Corporate America crime free would be a Utopian dream; but frauds such as Enron and Lehman Brothers could be identified and thwarted at an earlier stage with greator vigilance from the regulators.
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