REFLECTION. 1. Reflection Name Affiliation Instructor D

Running Head: REFLECTION 1
Reflection
Name
Affiliation
Instructor
Date

Reflection 2
Reflection
Sabanes Oxley Act and the CLERP 9
These regulations were brought into place so that shareholders, the public and employees
could be protected from accounting errors as well as fraudulent practises in the financial
sector. This is a federal law in the United States (Sarbanes, 2002) that creates financial and
auditing regulations for various public companies. In doing so, financial reporting in public
companies could be improved hence bringing up confidence amongst investors especially
when corporate crime was on the increase. In addition, some provisions of the Act extend
their cover to not-for- profit organisation, private companies and all enterprises, (Baker,
2018). In case of noncompliance, SOX has its own set of penalties. On the other hand, CLERP
9 aims at promoting better disclosure and promoting full participation of shareholders in
their companies
Main issues
The main issues that were raised by CLERP 9 included the need to have corporate disclosure
as well as improving the reporting framework of finances that companies face. SOX had
similar issues where financial reports were deemed to be reported in an unfair way hence
creating panic situations amongst shareholders and investors. Most importantly, financial
reporting as well as audits had to be considered in the Act. This extended to CFO/CEO sing
off, Analysis and Management discussions. Conflict of interests were also raised especially
during licensing. There was need to create independence amongst analysts.

Reflection 3
How the issues developed
The issues raised above developed after concerns were raised by shareholders and investors
when they were faced by corporate scandals, (Chintrakarn et al., 2017). It is my opinion that
these regulations were put in place because of high cases in the falsification of financial
reports so that it was easy for CFOs and CEOs to steal money and reflect a failing company
or investment. A good example are companies such as Enron Corp, World Com and Tyco
International where millions of dollars were stolen by top managers.

Reflection 4
References
Chintrakarn, P., Treepongkaruna, S., Jiraporn, P., & Tong, S. (2017). Does board
independence substitute for external audit quality? Evidence from an exogenous
regulatory shock.
Baker, C. R. (2018). The lack of impact of fair value accounting: a commentary on ‘“fair
value” accounting as the normative Fisherian phase of accounting’. Accounting
History Review, 28(3), 191-198.
Sarbanes, P. (2002, July). Sarbanes-oxley act of 2002. In The Public Company Accounting Reform
and Investor Protection Act. Washington DC: US Congress.