The fraudulent misrepresentations of several public companies' financial positions have recently been brought into the public eye. The large bankruptcy of WorldCom and the similar conspiracies at Enron and HealthSouth made it clear that something had to be done to avoid such schemes. These scams were not only deceiving trusting investors, but also harming the good names of accountants everywhere. In an effort to prevent such occurrences, the Securities and Exchange Commission formed the Sarbanes-Oxley Act of 2002. This legislation alone has completely transformed the U.S. security regulations ("New Financial Rules" 2004, 1).
             The Sarbanes-Oxley Act's objective is to strengthen public companies' guidelines for financial reporting, internal controls, and auditing standards. In doing so, fraudulent activities will be caught regularly and future scams can possibly be deterred. The Sarbanes-Oxley act ultimately places more accountability on CEOs, CFOs, audit committees, and also independent auditors. It entails the verification that each company has satisfactory internal controls and that guidelines for financial reporting are established. All in all, the act aims to ensure near accuracy in reporting of financial statements ("New Financial Rules" 2004, 1).
             Section 404 of the Sarbanes-Oxley Act is a main focus for many organizations. It calls for the yearly report of a corporation to include (1) a statement from management testifying to their answerability as to having a satisfactory internal control system and bylaws for financial reporting; and (2) management's year end assessment of the internal control and financial reporting procedures. A company's auditor is also required to evaluate and attest to the assessment mention previously. Compliance with Section 404 is a main concern of many businesses, because it is this compliance that will be extremely costly ("New Finan...