Do you think the current business regulatory environment has

Do you think the current business regulatory environment has gone too far or not far enough in stopping a future Enron?

Solution

The failure of the Houston based Enron Corporation was toughest policy challenges of any financial collapse in recent memory and definitely enough to show the American public and its representatives in Congress that new compliance standards for public accounting and auditing were needed. In the past several years only the disclosure problems that has been surfaced in the Enron case have been cleared particularly damaging misrepresentation growing earnings report to shareholders and rising concern about earning management as expressed by the Securities and Exchange Commission (SEC) and others.

In order to cut down the corporate fraud, Sarbanes Oxley Act has been drafted by the Senator Paul Sarbanes and representative Michael Oxley. The SOX Act was created to protect investors by improving the accuracy and reliability of corporate disclosures by

In Enron\'s fraudulent behavior, SOX changes the way to deal with the financial auditors. According to SOX, all companies must provide a year end internal control report and their effectiveness.

The benefits of the system delivers true auditor independence are massive. Equity market depend on the reliable public disclosure of information about public companies. If reforming the system could reduce the chances of another Enron, businesses should be willing to bear costly and disruptive change to do it.