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Dodd Frank And Sarbanes Oxley Acts Essay

857 words - 4 pages

Dodd-Frank and Sarbanes-Oxley Acts:
Dodd-Frank and Sarbanes-Oxley Acts are important legislations in the corporate world because of their link to public and privately held companies. Sarbanes-Oxley Act was enacted to enhance transparency and accountability in publicly traded companies. On the contrary, Dodd-Frank Act was enacted to disentangle the confused web of financial service company valuations. Actually, these valuations are usually hidden by complex and unclear financial instruments. The introduction of Sarbanes-Oxley Act was fueled by recent incidents of accounting frauds by top executives of major corporations such as Enron. In contrast, Dodd-Frank Act was enacted as a ...view middle of the document...

The relationship that Sarbanes-Oxley Act has with financial markets is attributed to its focus on corporate governance at publicly traded companies. This legislation necessitates management of public firms to evaluate the effectiveness of internal control and financial reporting. Generally, Sarbanes-Oxley Act was enacted to enhance audit quality and improve the dependability of financial reporting. As a result, the law seeks to protect financial markets from the effects of financial wrongdoing at several major companies. SOXs relationship to the financial market is its attempt to protect communities, investors, and markets from illegitimate financial practices and their effects.
Similarities between the Acts:
As previously mentioned, Sarbanes-Oxley Act and Dodd-Frank Act has certain similarities because of their focus in promoting the health and vitality of financial markets. One of the similarities in these regulations is their basic focus on dealing with fraud, which significantly affects an organization’s revenues and stakeholders. The detection of accounting fraud has become a major concern in the modern financial market because of the increase in accounting fraud cases in public companies. Sarbanes-Oxley Act seeks to deal with fraud through enhancing internal controls and financial reporting measures. Dodd-Frank Act seeks to achieve this objective through enhancing whistleblowing and providing external rewards (Brink, Lowe & Victoravich, 2013, p.88). Generally, these acts create fraud whistleblowing environment in order to mitigate the occurrence and effects of fraud.
The second similarity between these acts is that they deal with complexities in accounting procedures and practices that are likely to contribute to financial wrongdoing by management. Sarbanes-Oxley Act deals with complexities by requiring management to evaluate and enhance internal controls and financial...

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