Sample Essay

The SOX act has received a promising response and people are accepting it and embracing it with open arms because the general public is benefitting from it. The confidence of people is coming back and they again investing in securities and shares. The observance by regulators and compliance of this Act ensures that there are lesser fraudulent activities and business failures. Furthermore, SOX declares the responsbility SEC to review the financial statements in addition such as oversight of securities firms, exchanges, investment advisors, evaluation of mutual funds and market trading. All these activities would require increasing its budget and extra placement of staff which it lacks to handle such gruesome projects (Ribstein 2002).

The burdening up of small companies can be treated as one of the biggest criticism of SOX. Larger corporation have the tendency to absorb the cost of its implementation however smaller companies cannot incur such heavy costs and costs associated with training, implementation would effect a small organization in both the short and the long run. The increased cost of compliance for public limited companies outset the benefits which are resulting from this Act. These costs are related to audit expenses which audit firms incur to fulfill their engagements and on an average the cost for small firms exceed US$1 million and for larger firms it may soar up to US$4.5 million as recorded in 2004 (Rezzy 2007).

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