Sarbanes Oxley Act of 2004 The Sarbanes-Oxley Act of 2002 was signed into law on July 30, 2002, by President Bush. The new law came after major corporate scandals involving Enron, Arthur Anderson and WorldCom. Its goals are to protect investors by improving the accuracy and reliability of company information and to restore investor confidence. The law is considered the most important change in securities and corporate law since the New Deal. The act is named for Senator Paul Sarbanes of Maryland and Representative Michael Oxley of Ohio (Wikipedia Online). Sarbanes-Oxley consisted of 11 different titles or sections. Title I is Accounting Supervisory Body for Public Companies. It created a five-member board known as the Public Company Accounting Oversight Board, overseen and appointed by the Securities and Exchange Commission (Sarbanes-Oxley). The Council must be made up of two accountants and three people who are not accountants, but the president must be an accountant. The Board must provide audit oversight of public companies while establishing audit, quality control, independence, and ethical standards (Arens 32-33). Public accounting firms working on audits must register with the Council and pay a fee. New audit rules are also included in Title I. Auditors must now retain documentation for seven years, have a second partner review and approve audit reports, evaluate whether internal controls accurately show transactions and sales of assets, and describe any weaknesses or non-compliant internal controls. Public accounting firms that issue audit reports for more than 100 companies must be inspected annually. Accounting firms that issue audit reports for fewer than 100 companies must be inspected every three years. The Board can discipline or fine accounting firms for what it deems to be negligent conduct (State Bankers Conference online). Title II of the Sarbanes-Oxley Act is auditor independence. Create new rules that reviewers must follow to maintain their objectivity and accuracy. Auditors are now prohibited from performing most non-audit-related services, such as accounting, actuarial services and management consulting. An auditor can no longer be the lead auditor of a company for more than five consecutive years. Auditors are now required to report all significant accounting policies and practices used in the audit, any different treatment… middle of paper… GE said the new compliance costs amount to about $30 million. AIG said Sarbanes-Oxley is costing the company $300 million. Many European companies have also complained because they are forced to adapt because they are listed on American stock exchanges. Surveys have also found that many companies are even considering going private to avoid Sarbanes-Oxley compliance (Bartlett 1-3). Works Cited Arens, Alvin, Randal Elder, and Mark Beasley. Auditing and Assurance services: an integrated approach. Upper Saddle River, NJ: Pearson Prentice Hall, 2005. Bartlett, Bruce. "The Crimes of Sarbanes-Oxley." National Review May 25, 2004.http://www.nationalreview.com/nrof_bartlett/bartlett200405250811.aspState Bankers Online Conference. Executive Summary of the Sarbanes-Oxley Act of 2002. February 10, 2005.http://www.csbs.org/government/legislative/misc/2002_sarbanes-oxley_summary.htmSarbanes-Oxley Act of 2002. 107 Cong., 2nd sess. 2004.http://frwebgate.access.gpo.gov/cgibin/getdoc.cgi?dbname=107_cong_ bills&docid=f:h3763enr.tst.pdf.Sarbanes-Oxley Act..