会计学原理论文完整版.docx

会计学原理论文完整版.docx

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会计学原理论文完整版

THEIMPACTANDCRITISMSOF

THESARBANESOXLEYACTOF2002

By

HongLin

XiaojieXia

TingyaoWu

MingyueYao

MengyaHe

DISSERTATION

PresentedtotheFacultyof

ZhejiangScienceTechnologyUniversity

inFulfillment

oftheRequirements

forthecurriculumof

PRINCIPLESOFACCOUNTING

ZhejiangScienceTechnologyUniversity

JUN2016

TABLECONTENTS

ABSTRACT3

LISTOFACRONYMS4

CHAPTER1BACKGROUD5

CHAPTER2IMPACTSOFSOX6

AUDIT6

INTERNALCONTROL6

FINANCIALSTATEMENTS9

INFORMATIONSECURITY10

INFORMATIONASYMMETRY11

IMPROVINGBUSINISSETHICS11

AFFECTCEOINVESTMENTBEHAVIORS12

CHAPTER3CRITISMSTOWARDSOX14

HIGHCOSTOFSOX14

STRESSFORSMALLANDMID-SIZEDCOMPANIES15

CROSS-LISTISSUES17

MAYBEUNCONSTITUTIONAL17

MAYBENOTSOUSEFUL18

PAYMOREATTENTIONTOTHEDOCUMENT19

FINANCIALINFORMATIONDELAY19

CHAPTER4CONCULUTION20

REFERENCE21

ABSTRACT

ThisdissertationstudiestheimpactsandcriticismsoftheSarbanes-OxleyActof2002.ChapterOneintroducethebackgroundoftheSOX,whichisenactedafteraseriesofeconomicscandalsbeingexplored.ThosecasescausedaseverinfluenceonAmericaninvestor,sothecountrywantedtoprotectthebenefitsoftheinventorbytheSOX.ChapterTwointroducethepositiveimpactsoftheSOX,fromdisclosuretosubstantivecontrol,attachesgreatimportanceonauditorindependence,internalcontrols,andenhancedfinancialdisclosure,companiesmayaswellobeyitandundertaketheirobligationofinformationdisclosure.Inaddition,itincreasesthecompanies’awarenessofinvestmentrisks,makingtheinvestmentdecisionmorerational.What’smore,theSOXincreasestheindependenceoftheoutsideauditorsandtheoversightroleofboardsofdirectorsandthePCAOB,whichenhancesinformationsecurityoffinancialmarketaswellasreducingtheconflictofinterestinsomeway,makinginvestorshavemorefaith.ChapterThreeintroducethecriticismsoftheSOX,fromthehighercosttocomplicatedproceduresofinternalcontrol,especiallyincreasingpressurestothelistedcompanieswithsmallerscale.Additionally,itischargedasunconstitutionalinsomewayanddelaytheprovidingoffinancialstatementandthehighdegreeofgovernmentinterventionalsodoesharmtoeconomicprogress.ChapterFourmakeconclusionsandourgroupgainagooddealofenlightenmentfromtheSOX.TheSOXremainstobeimprovedbecauseitwasenactedinahurry,soitcannotbewellinlinewithexpectation.Andthereneedstobeanappropriategovernmentrestrictioninmarket.

LISTOFACRONYMS

COSOTheCommitteeofSponsoringOrganizationsoftheTreadway

Commission

ICFRInternalControlFinancialReporting

NYSENewYorkStockExchange

PCAOBPublicCompanyAccountingOversightBoard.

SECSecurityExchangeCommission

CHAPTER1BACKGROUD

In2002,duetotheEnronbankruptcyaswellasthefinancialreportingscandalsofWorldCom,Adelpthia,Tyco,andothercompanies,congressbeganengagedinacorporategovernancebill：

theSarbanes-OxleyAct（SOX）,whichwasadoptedexpeditiouslyafterWorldComappliedforbankruptcyinJuly2002（Stephen&Curtis2014;Rodney2004）.HencethewayofcorporateAmericaaskedtoensuretheaccuracyoffinancialdatatotheinvestingpublichasbeenthoroughlyaltered（Rodney2004）.

ThemainobjectivesofSOXareasfollows:

a.Toincreasetheaccuracyandreliabilityofcorporatedisclosures

b.Torestoreinvestors’confidenceinU.S.capitalmarkets

c.ToimprovethecorporategovernanceofU.S.tradedfirms.（Peteretal.2013,p.522）

CHAPTER2IMPACTSOFSOX

AUDIT

AnimportantreasonforthecollapseoftheEnronCorporationandWorldComInc.isthattherelationshipbetweenexternalauditorsandmanagementissoclosely.Thereasonisthatthecertifiedpublicaccountantsasanoccupationandthecertifiedpublicaccountantsasabusinesshavetheirowninterest.（MichaelM.MacQueen2010）Ifcertifiedpublicaccountantscan'tbeobjectiveandfair,thefinancialreportsubmittedmaystillbeunabletoachievethepurposeofreducinginformationasymmetry,sotheSarbanes-OxleyActestablishThePublicCompanyAccountingOversightBoard（PCAOB）whichisaninstitutionindependentoftheAmericancertifiedpublicaccountantsinordertosuperviseauditandstrengthentheeffectivenessofexternalauditors.（MichaelM.MacQueen2010）

Atthesametime,theSarbanes-OxleyActprovisions（TitleII）:

“CertifiedPublicAccountantsmaynotprovidenon-auditservicesforauditclients；Allauditandnon-auditservicesmustbeapprovedinadvance;Establishregularmandatoryauditpartnerrotationsystem;Establishareporttotheauditcommitteesystem;Setupawithdrawalsystemforcertifiedpublicaccountantsaudit,toavoidconflictsofinterest.”（MichaelM.MacQueen2010）Inordertostrengthentheindependenceoftheexternalauditor.

INTERNALCONTROL

Edward（2003,p.20）says,“Internalcontrolsaredefinedasprocessescreatedbyacompany'sboard,managementandotherpersonneltoprovidereasonableassurancesregardingtheeffectivenessandefficiencyofoperations,reliabilityoffinancialreporting,andcompliancewithlawsandregulations.“

Accordingtotheimprovedregulation,itisanecessityforallcompaniestoestablishindividualinternalcontrolsystemswhichcanofferaguaranteeforinvestorsthatriskmanagementisinavalidmanner.TheCommitteeofSponsoringOrganizations（COSO）framework（COSOERM（2004））putsforwardaproposalthatadequatelyefficientinternalcontrolmakeitguaranteedthatacompanyoperateseffectively,andstatesconsistentwithitsmissionthatitsmanagementdataandfinancialreportingarereliableaswellasitboostscomplianceonthebasisofapplicationoflawsandregulations.（Aapo,Annukka&Tomas2016）

Joseph,RandelandSteve（2008,p.997）say,“Overall,theOversightSurveyssuggestthatfinancialexecutivesseestrongimprovementininternalcontrolsandthequalityoffinancialreportingasaresultofimplementingSarbanesrequirementsandgoingthroughtheprocessofdocumentingandtestinginternalcontrols.”

Eventually,itispossibleforlotsofCEOstofindthatthenewregulationsofSOXprovidetoolsforthemwhichareusefulforofferingmoreconfidencetotheminrunningtheirfirms.Furthermore,Internalcontrolsassistmanagers,leadinggroupsandbusinessestofunctionmoreefficientlyandsteerclearofproblemslikeoverexpenditure,troubleinoperation,deceptionandlawsuit.ItcouldwellbethatCEOsfindthemselvesshoulderingarefreshedsenseofresponsibilityandtheoverwhelmingsenseofachievementforhavingdoneextraordinaryworkthroughbearingliabilityfortheirfirms’internalcontrols.（Edward2003）

AfterthescandalofEnron,thefourthchapterofSarbanes-OxleyActconcentrateonenhancingthecompany'sfinancialinformationdisclosure,especiallyforthe404rules,whichfocusonthemanagementtoevaluatetheinternalcontrolsituation（KamChan, GaryKleinman&PichengLee2009）.The404（a）requiresthelistedcompanyshouldassesstheinternalcontrolofthecompanyeachyearandstrengthenthestatusoftheindependencedirector.The404（b）requiresthelistedcompaniespublishareportaboutdisclosingselfweaknesseachyearandexternalauditorsindependentlysubmittedareporttoconfirmit.Onlyinthiswaycantheinvestorsandmarketparticipantsknoweveryimportantweaknessinmanagementoflistedcompaniesmoreaccuratelyandfollowuptheresultsofimprovement.（Hua-WeiHuang2009）

Sarbanes-OxleyActof2002

SEC.404.MANAGEMENT!

NOTE:

15USC7262.ASSESSMENTOFINTERNALCONTROLS.

（a）RulesRequired.

–TheCommissionshallprescriberulesrequiringeachannualreportrequiredbysection13（a）or15（d）oftheSecuritiesExchangeActof1934（15U.S.C.78mor78o（d））tocontainaninternalcontrolreport,whichshall–

（1）statetheresponsibilityofmanagementforestablishingandmaintaininganadequateinternalcontrolstructureandproceduresforfinancialreporting;

（2）containanassessment,asoftheendofthemostrecentfiscalyearoftheissuer,oftheeffectivenessoftheinternalcontrolstructureandproceduresoftheissuerforfinancialreporting.

（b）InternalControlEvaluationandReporting.

–WithrespecttotheInternalcontrolassessmentrequiredbysubsection（a）,eachregisteredpublicaccountingfirmthatpreparesorissuestheauditreportfortheissuershallattestto,andreporton,theassessmentmadebythemanagementoftheissuer.AnattestationmadeunderthissubsectionshallbemadeinaccordancewithstandardsforattestationengagementsissuedoradoptedbytheBoard.Anysuchattestationshallnotbethesubjectofaseparateengagement.

The404（b）establishandmaintainaninternalcontrolsystem,whichcalledInternalControlsforFinancialReporting,ICFR）andcontainfiveprocedures:

1）Organizeandunderstandthebusinessprocessaswellasassessrisk

-understandthedefinitionofinternalcontrol;identifykeybusinessandinherentrisk

-organizetheprojectteamtoimplementevaluationwork

-evaluatecorporateinternalcontrol（includingIT）control

2）Documentationandevaluation

-recordlevelofinternalcontrolandinformationtechnologycontrol

3）Implementimprovementplan

-themanagementtoimplementimprovementplan

4）Testingandrectification

-evaluatetheeffectivenessofthewhole,thenfindouttheimprovementaspectsandtoestablishamonitoringsystem

5）Audit

-themanagementreportoninternalcontrol;externalauditors’independentevaluationreport（LokenathanPalanisamy2015）

FINANCIALSTATEMENTS

Section302（a）（3）ofSOXrequiresthatseniormanagementprovidescertificationofthetotalfairnessoftheirfirm’sfinancialreportsinordertohelpatta