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Our staff of freelance writers includes over 120 experts proficient in Sarbanes-Oxley Act of 2002Prohibiting Improper Influence on Auditors, therefore you can rest assured that your assignment will be handled by only top rated specialists. Order your Sarbanes-Oxley Act of 2002Prohibiting Improper Influence on Auditors paper at affordable prices !IntroductionOn October 18, 00, the Securities and Exchange Commission issued proposed rule amendments to implement section 0 of the Sarbanes-Oxley Act of 00. The amended rules makes it unlawful for any officer or director, or other person acting under the direction of that officer or director, to take any action to fraudulently influence, coerce, manipulate, or mislead any independent public or certified public accountant engaged in auditing or reviewing financial statements if that person knew, or was unreasonable in not knowing, that such action could, if successful, result in rendering such financial statements materially misleading.The rules supplement existing rules under Regulation 1B- of the Securities Exchange Act of 14 and are included in that Regulation. Previous rules address the falsification of books, records and accounts and false or misleading statements, or omissions to make certain statements to accountants. While rule 1b-(b)(1) essentially mirrors the language of the Act, rule 1b-(b)() provides examples of actions that improperly influence an auditor that could result in rendering the issuers financial statements materially misleading. Rule 1b-(c) relates to registered investment companies and business development companies. The rules are not limited to the audit of the annual financial statements, but include, among other things, improperly influencing an auditor during a review of interim financial statements or in connection with the issuance of consent to the use of an auditors report.
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Persons Whose Activities are Subject to the Proposed RulesActivities by an Officer or a Director.Rule (b)(1) would address activities by an officer or a director of an issuer, or any other person acting under the direction of such person. The term officer includes a chief executive officer and other executive officers. Moreover, a person may be an officer regardless of the persons title or the legal entity with which he or she is associated. For example, officers of wholly-owned subsidiaries of public companies and promoters may be officers of public companies. Activities by a Person Acting Under the Direction of an Officer or a Director. Rule (b)(1) not only covers activities of officers and directors, but also any other person acting under the direction of an officer or a director. It provides the Commission with other means of addressing actions of such other persons, which are in addition to previous liabilities for anti-fraud or aiding or abetting violations. The Commission provides specific examples of persons, other than employees of the issuer, who may be acting under the direction of an officer or a director even if they are not under that persons supervision or control, including customers, vendors or creditors. In certain circumstances, such other persons might include partners or employees of the accounting firm and attorneys, securities professionals and other advisers, who, by certain actions, pressure an auditor to limit the scope of the audit, to issue an unqualified report on the financial statements when such a report would be unwarranted, to not object to an inappropriate accounting treatment, or to not withdraw an issued opinion on the issuers financial statements.Activities by Investment Company Service Providers. As compared to other issuers, the Commission recognizes that registered investment companies and business development companies are unique in having contracts with service providers who perform management, administrative and other services necessary for operation, including preparation of financial statements. Given the uniqueness of their situation, proposed rule 1b-(c) would cover not only the officers and directors of the investment company, but would extend to include that companys investment adviser, sponsor, depositor, administrator, trustee, principal underwriter, custodian, transfer agent, or other service providers.Types of Conduct to Fraudulently InfluenceThe rule, in combination with existing rules in Regulation 1B-, provide the Commission with other means to address conduct to fraudulently influence, coerce, manipulate, or mislead an auditor during his or her examination, including conduct that did not succeed in affecting the audit or review.The Commission has identified in the Release, types of conduct that it believes might constitute improper influence on auditors. This list includes, but is not limited to, directly or indirectly•Offering or paying bribes or other financial incentives, including offering future employment or contracts for non-audit services•Providing an auditor with inaccurate or misleading legal analysis•Threatening to cancel or canceling existing non-audit or audit engagements if the auditor objects to the issuers accounting•Seeking to have a partner removed from the audit engagement because the partner objects to the issuers accounting•Blackmailing•Making physical threats. The facts and circumstances of each case, including the purpose of the conduct, would be relevant to determining whether the conduct violates the proposed rule.Engaged in the Performance of an AuditThe Commission believes that Congress intended that the phrase engaged in the performance of an audit, found in rule (b)(1), should be interpreted broadly to include the professional engagement period and any other time the auditor is called upon to make decisions regarding the issuers financial statements, including during negotiations for retention of the auditor and subsequent to the professional engagement period when the auditor is considering whether to issue a consent on the use of prior years audit reports. The rules, therefore, would apply throughout the professional engagement and after the professional engagement has ended when the auditor is considering whether to consent to the use of, reissue, or withdraw prior audit reports.In limited circumstances, the rules may also apply prior to the commencement of the professional engagement. By way of example, the rules would apply if an officer, a director, or a person acting under the direction of that officer or director, offers to engage an accounting firm on the condition that the firm either issue an unqualified audit report on financial statements that do not conform with GAAP, or limit the scope or performance of audit or review procedures in violation of generally accepted auditing standards.For the Purpose of Rendering Financial Statements Materially Misleading To be actionable, the conduct must be for the purpose of rendering [the issuers] financial statements materially misleading. The Commission notes that an auditor would not directly render the financial statements materially misleading, since it is management who prepares the financial statements and the auditor who conducts an audit or review of those statements.Rule (b)() provides specific examples of actions that improperly influence an auditor that could result in rendering the issuers financial statements materially misleading. The list, includes actions taken at any time with respect to the professional engagement period to fraudulently influence, coerce, manipulate, or mislead an auditor•To issue a report on an issuers financial statements that is not warranted in the circumstances (due to material violations of generally accepted accounting principles, generally accepted auditing standards, or other standards)•To not perform audit, review or other procedures required by generally accepted auditing standards or other professional standards•To not withdraw an issued report•To not communicate matters to an issuers audit committee The proposed rule would not be limited to the audit of the annual financial statements, but would include, among other things, improperly influencing an auditor during a review of interim financial statements or in connection with the issuance of consent to the use of an auditors report.ConclusionCorporate financial statements are a critical source of information available to guide the decisions of investors. The rules covered in Release 4-46685 and section 0(a) of the Act, are premised on the idea that investors must be able to rely on reports by auditors concerning the financial statements included in filings made with the Commission. These reports provide assurance that an issuers financial statements have been subjected to rigorous examination by impartial, outside experts, and that investors and the market can rely on the information as sound. The need for independence in the auditors examination, sought by the rules prohibiting activities which might improperly influence auditors, is another measure intended to restore public confidence in the fairness of the markets. Please note that this sample paper on Sarbanes-Oxley Act of 2002Prohibiting Improper Influence on Auditors is for your review only. In order to eliminate any of the plagiarism issues, it is highly recommended that you do not use it for you own writing purposes. 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