Sarbanes-Oxley Act Essay Example | Topics and Well Written Essays - 2000 words

Sarbanes-Oxley Act - Essay Example Based in Houston, Texas Enron has moved from its modest position to be the tagged as the 7th largest company in the United States and was expected to climb higher and stand out in the power and electric industries. In 2001, the company has 21,000 employees, believed to be in its peak operations. But there was no power shortage in California, hungry to profit more; in a tapped conversation, investors were discovered to have called the plant managers, asking them to shut down the power plants for ‘repairs’ even if there were no technical problems or such. With this ‘technical problems’ prices of electricity rose up to nine times. Enron was a blue chip stock, sold at 90 dollars per share; conniving with its accounting firm, the Arthur Andersen, it has carried out illegal accounting practices since mid 1990’s. It took the plunge when it was found out that its revenues were from trading with special purpose entities. It has at the same time anomalously not declared its losses and debts and from the 90 dollar per share, it has slipped down a 50 centavo per share in a matter of months after the scandal was made public. What made it more devastating was that the same modus was used by other companies such as the MCI-World com, Global Crossings and Tyco among others. The accounting firm that figured in the Enron scandal has handled some of the financial reports of these erring companies. From this economic mess, people feared to invest their money in the market. The government was expected to do something drastic. To make measures to combat the public’s fear to do business with the market. Thus Congressman Paul Sabanes from Maryland, former senator and the longest serving Congressman of Maryland with Michael Oxley from the 4th district of Ohio sat down and authored a bill to respond the problem. They designed a bill that will implement stricter policies for public companies to follow, professional and ethical guidelines for certified public accountants,