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ys, 2005, p. 5). The Sarbanes Oxley Act contains 11 different sections called 'titles' ranging from additional corporate board responsibilities to criminal penalties, and requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the new law. The 11 titles are: Public Company Accounting Oversight Board (PCAOB); Auditor Independence; Corporate Responsibility; Enhanced Financial Disclosures; Analyst Conflicts of Interest; Commission Resources and Authority; Studies and Reports; Corporate and Criminal Fraud Accountability; White Collar Crime Penalty Enhancement; Corporate Tax Returns; and Corporate Fraud Accountability.

Some of the perceived problems unearthed by the Senate Banking Committee leading to the passage of SOX included: inadequate oversight of accountants, lack of auditor independence, weak corporate governance procedures, stock analysts' conflict of interests, inadequate disclosure provisions, and grossly inadequate funding of the Securities and Exchange Commission. Prior to SOX, auditing firms, the primary financial 'watchdogs' for investors, were self-regulated. They also performed significant non-audit or consulting work for the companies they audited. Many of these consulting agreements were far more lucrative than the auditing engagement. This presented at least the appearance of a conflict of interest. As an example, CPAs with Arthur Anderson, continually looked the other way while auditing Enron's accounts as they did not want to jeopardize potential future consulting contracts which were worth more than the auditing fees currently being generated.

Another problem identified by the Senate Banking Committee which helped to establish the need for implementing new accounting standards concerned audit committees. Audit committees on Boards of Directors, were charged with establishing oversight mechanisms for financial reporting in U.S. corporations on the behalf of investors. The Enron, WorldCom and Tyco scandals identified Board members who either did not exercise their responsibilities or did not have the expertise to understand the complexities of the businesses. In many cases, audit committee members were not truly independent of management.

As a result of the aforementioned conflicts, the relationship between accounting firms and their publicly held audit clients dramatically differs under the Sarbanes-Oxley Act. The following changes for auditors are as a direct result of the passage of SOX; starting with the fact that auditors will report to and be overseen by a company's audit committee. These audit committees must pre-approve all audit and non-audit services provided by their auditors. Auditors must report new information to the audit committee, including 'critical accounting policies and practices to be used, alternative treatments of financial information within GAAP that have been discussed with management, accounting disagreements between the auditor and management, and other relevant communications between the auditor and management' (McDermott, 2010). The Sarbanes-Oxley Act statutorily prohibits auditors from offering certain non-audit services to audit clients. These services include: 'bookkeeping, information systems design and implementation, appraisals or valuation services, actuarial services, internal audits, management and human resources services, broker/dealer and investment banking services, legal or expert services本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。