Sarbanes-Oxley Act and Fraud

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Fraud There are many reasons that someone would commit fraud and only those people will ever know what pushed them to do so. The three main factors that contribute to fraud are opportunity, financial pressure, and rationalization. If the workplace does not have proper controls in place to deter people from wanting to commit fraud, it makes it easier to do so. The financial pressure portion of this can sometime be fueled by nothing more than greed. Mostly this occurs because an employee has financial issues and believes that the company would not miss even a little bit of money. Money people who commit fraud feel justified in doing so because they believe they are underpaid and undervalued all while the higher ups in the company live a lavish life. When all three of this are combined it makes fraud seems reasonable and not as bad as it would for people that don’t feel this way. Sarbanes-Oaxley Internal control can be defined as “all the related methods and measures adopted within an organization to safeguard its assets, enhance the reliability if its accounting records, increase efficiency of operations, and ensure compliance with laws and regulations” (Kimmel, Weygandt & Kieso, 2011, p.337). Making sure that this system is in place and clear is up to the upper level management. The Sarbanes-Oaxley act was passed in 2002 by congress and was in order to place a system inside of corporations that would maintain internal control “under SOX, all publicly traded U.S. corporations are required to maintain an adequate system of internal control” (Kimmel, Weygandt & Kieso, 2011, p.337). In other words it is protecting investors from fraudulent accounting activities by large corporations. Companies that do not comply with the rules that are set forth in accordance with SOX are fined and the officers of the said company can be arrested. SOX has been successful and has also

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