The Changing Public Reports by Management and the Auditors of Publicly Held Corporations: An Updated Comparative Study of General Motors Corporation and Ford Motor Company
Competition Forum › Vol. 7 Nbr. 2, July 2009
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Summary
As a result of the Enron debacle and based on a wave of revelation of accounting irregularities and securities fraud inter linked to Adelphia, Tyco and WorldCom, Congress passed the Sarbanes-Oxley Act (SOX) in June 2002. This was the most significant securities law change since passage of the original Federal Securities Law in 1933 and 1934. This paper provides background information on sections 302 and 404 of the Act. Based on that information, The Internal Controls Report of management and the Independent Auditor's Report of General Motors Corporation and Ford Motor Company from the years 2002 through 2008 are summarized, analyzed, and compared.
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Extract
The Changing Public Reports by Management and the Auditors of Publicly Held Corporations: An Updated Comparative Study of General Motors Corporation and Ford Motor Company
INTRODUCTION
In response to numerous accounting scandals that rocked corporate America at the turn of the 21st century, the US Government passed the Sarbanes-Oxley Act of 2002 (SOX). Scandals affecting corporations such as Tyco International, Enron, WorldCom, HealthSouth, and Adelphia resulted not only in the loss of millions of dollars in shareholdings and thousands of jobs, but also in the decline of public trust in financial accounting and reporting.BACKGROUNDAccordingly, SOX established standards for all public company boards, management, and public accounting firms in the United States and thus giving publicly traded companies a much greater understanding of internal controls and the need for such controls. These standards require corporations to evaluate and disclose the effectiveness of their internal controls as they relate to financial reporting as well as the Independent Auditor's Report attesting to such disclosure. In addition, SOX requires that...See the full content of this document
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