Video: Goals of SOX 2002

In this lesson, Nick Palazzolo, CPA, sheds light on the overarching objectives of the Sarbanes-Oxley Act of 2002, emphasizing its pivotal role in bolstering investor confidence by enhancing the accuracy and reliability of corporate disclosures in financial statements. Nick articulates how SOX demands increased transparency regarding internal controls and stresses the significance of having a competent audit committee and senior officers adhering to a code of conduct. He also clarifies common misunderstandings by outlining what SOX does not cover, such as a company's profitability or risk management strategies, focusing solely on the precision of financial reporting regardless of the entity's performance.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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Goals of Sox. 2002. What are your goals? Well, this kind of touches on what I was talking about in the beginning. Just a broad overview, right?

Like, what is the point of all this? Why are we doing what we're doing? We want to improve investor confidence because we want to keep everyone's 401Ks, the financial markets afloat, right? We want everyone to invest confidently, knowing that the financial statements they read and the earnings that are reported are accurate. Sox does this by facilitating greater transparency with the adequacy of the issuer's internal controls. We've seen that as well before. The internal controls need to be adequate because if they are not, well, many individuals in the company could fraudulently report parts of the financial statements. We need a competent audit committee, and we will see more about this audit committee later on. Compliance of senior officers with a code of conduct. We need a written code of conduct. Right there. Super important to know.

What do we not concern ourselves with? These can be tricks in a multiple choice question. Also, just think about them for a second. Right? We don't concern ourselves with profitability, meaning operations like we talked about. Operations not important here. The company could be doing awful. Sox isn't going to help you do better as a company. It's just going to ensure that you accurately report how awful you're doing. Profitability is not a concern for us. Balancing risk and growth of the entity. So, again, Sox doesn't care how well we're doing. It just cares about how well we report how we are doing. And anything else besides what we discussed. That's a line from directly FAR me. Yeah. Unless we directly discussed it, it is not relevant to Sox. I have a

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Identify Risk During Planning

Module: 5 Concepts, 62 Videos

Fraud & General Risk at All Levels Overview

0:22

Fraud & General Risk at All Levels Objectives

1:19

Introduction to Fraud and General Risk at All Levels

2:04

The Fraud Triangle