Is it time to change SOX?
Solongo Batbaatar
MA0N0228
Sarbanes-Oxley Act of 2002
Purpose of the law
• Prevent corporate accounting fraud &
financial scandals
• Protect investors
Section 404
• It requires companies to have internal &
external financial check. First review their own
systems for ensuring accurate financial reports
and then have them tested by outside
auditors.
Problems of complying the Act
• IT system
• Hire extra employees
Henry Paulson
US Treasury Secretary
– He said, section 404
should be implemented in
a more efficient and cost
effective manner.
Christopher Cox
Chairman of Security & Exchange Commission (SEC)
- Rule should be
adapted to
companies based
on company size.
Supporters of SOX
• Law and related reforms have produced more
reliable corporate financial statements, which
investors rely on when deciding whether to
buy or sell shares.
Duncan W. Richardson
Chief equity investment officer
• Even the act is
much-disparaged
requirements for
testing internal
financial controls
could drive gains
in corporate
productivity and
profits.
SOX impact on Market Efficiency
• In 2002, the market value of the Wilshire 5000
for all public companies in US, stood at $10.5
trillion.
• By April 2007, the value of the Wilshire 5000
was 14.5 trillion