Buy essay on THE IMPACT OF THE SARBANES-OXLEY ACT ON AUDITING

Numerous financial scandals that have occurred in the late 1990s – early 2000sencouraged consistent legislative changes in relation to the regulation of the securities and financial market. In the context of Enron, WorldCom and other scandals, the US legislators attempted to introduce legislative changes to regain the confidence of investors in the US securities. In terms of such changes, the Sarbanes-Oxley Act (SOX) of 2002 was implemented. The SOX has had a considerable impact on the auditing because it has introduced considerable changes in the auditing process to make the auditing more effective and accounting of public companies more transparent then they have ever before. In such a way, legislators attempted to improve the auditing process, to increase its effectiveness and to protect investors from the risk of scheming in accounting of public corporations. In this regard, the auditor independence has proved to be one of the major issues regulated by Title II of the SOX because the SOX granted auditors with the larger independence and prevented the risk of manipulations, scheming or any illegal interaction between auditors and public corporations and their accounting departments.
Auditor independence
In actuality, the independence of auditors is extremely important in regard to the effectiveness of the auditor’s performance and outcomes of the auditor’s work. To put it more precisely, the independence of auditors decreases the risk of the existence of any schemes between accountants and auditors because auditors are independent of public companies they audit. As a result, accountants cannot negotiate with auditors to hide some facts from the public, for instance. In such a situation, the auditor independence makes the work of auditors more transparent and decreases the risk of hiding some information concerning actual financial position of public corporations from investors and other stakeholders (Kuschnik, 2008). Therefore, the SOX increases the effectiveness of control over public corporations from the part of auditors, which can audit public corporations and inform investors about results of their auditing.
Auditor independence before the SOX and after
At this point, it is worth mentioning the fact that, before the implementation of the SOX, the auditor independence was relatively low. For instance, auditors could cooperate closely with public corporations and, naturally, they were interested in hiding information that could disturb investors or discouraged them to invest in the audited public corporation because, in such a situation, financial losses of public corporations would lead to the financial loss of auditors. As a result, auditors were often interested in positive reporting of the results of their auditing, instead of revelation the full and true information about the position of audited public corporations.
After the implementation of the SOX, auditors became independent. Therefore, they are discouraged to come into agreement with accountants of public corporations or to hide some results of their auditing from the public and investors (Kohn 2004). In contrast, their independence encourages their responsibility and the accurateness of their reports is the matter of their reputation. Therefore, auditors grow interested in effective and accurate auditing and reporting.
The impact of the SOX on auditor independence
The impact of the SOX on auditors is particularly significant. In fact, the SOX restricts auditing companies from providing non-auditing services for the same client. In such a way, the SOX decreases the risk of the existence of any mutual interests between auditors and public corporations (Farrell, 2005). In addition, the act implies the auditor partner rotation that makes it impossible to develop the long-lasting cooperation between a public corporation and the same auditor. Instead, auditors rotate regularly and the public corporation deals with new auditors that increases the effectiveness of work of auditors.
The impact of the SOX on accountants is also very significant because accountants have to make their work transparent and they cannot hide any information from auditors. They should provide auditors with accurate information because, even if an auditor fails to find some schemes in accounting, another auditor will do it, while schemes and manipulations in accounting of public corporations may lead to the criminal liability of accountants.
In such a situation, the impact of the SOX on stakeholders is apparently positive because it makes public corporations accounting more transparent, the work of auditors more effective, and investors better informed about the financial position of public corporations.
The impact of the SOX on the auditing process
The Sox has a considerable impact on the auditing process. To put it more precisely, the SOX sets new requirements concerning the auditor approval. In addition, the SOX sets new auditor reporting requirements (Shakespeare, 2008). All these changes make the work of auditors more independent, transparent and effective. The auditing process has become more regulated and controlled by public and state agencies but the auditing process has become more effective.
Conclusion
Thus, the introduction of the SOX contributed to the consistent improvement of the auditing process. The SOX increased the auditor independence and transparency of public corporations and their accounting. As a result, the public and investors can be certain in the reliable and effective auditing of public corporations.

References
Farrell, G. (2005). America Robbed Blind. New York: Wizard Academy Press.
Kohn, S.M. et al. (2004). Whistleblower Law: A Guide to Legal Protections for Corporate Employees. Chicago: Praeger Publishers.
Kuschnik, B. (2008). “The Sarbanes Oxley Act: “Big Brother is watching” you or Adequate Measures of Corporate Governance Regulation?” Rutgers Business Law Journal , 5, 64 – 95
Shakespeare, C. (2008). “Sarbanes–Oxley Act of 2002 Five Years On: What Have We Learned?” Journal of Business & Technology Law, 333.