Regulatory Risk and Governance The Sarbanes-Oxley Act, commonly referred to as SOX, created a new set of standards be used in ensuring the compliance publicly traded companies area financial statements reporting. While SOX rules were spurred onto center stage by string reporting scandals that topped headlines for months, involved became known household names wrongdoing even sent some top executives prison, have more purpose than simply preventing these (Beasley, 1996). idea behind accounting is protect public invests from investing based on skewed data. contained within are designed make sure reflect actual situation company data (Levitt, 1998). In perfect world, could trusted this case. This private oversight was what allowed such Enron HealthSouth manifest (Carvin, et al., 2007). Therefore, creation nongovernmental regulatory board enforce rule law, regarding required under SOX. Carvin (2007) Advance that, “The formation Public Company Accounting Oversight Board (PCAOB) had affected preparation companies’ reports” (NYUJL & Bus., 4, 199). When creates their annual reports, must use firm audit those reports audits checking accuracy against other records, registered with PCAOB subject (Imhaff, 2003). members not accept any profits firm, can review records firms (Imhoff, it may seem redundant, create series checks balances ensure being followed carried out correctly. added additional protections investors companies, allowing them accurate, effect has been decrease independence auditors who companies. increased dependence system an environment where difficult hide deception. auditing protection important remember large part process focused making there self-interest served process. extremely detailed requires special skills training. just anyone chosen (Weiss, Also, do interests would accurate. If auditor investor they responsible auditing, then benefit rise stock prices occur result profit margins or projections. These self-serving conflicts interest integral PCAOB, potential willing disclose all investments dealings no arise performed Different business situations submit various requirements. A member example, refuse firm. reason power discipline partners employees when results prepared Other require different regulations. include honoring non-compete agreements adhering licensure laws zoning codes. Each state municipal districts own apply operates district. license licenses obtained provide certain services sell products. Most strict codes only allow operate areas, restricting areas residential only. Businesses aware location zoned limits include. Some businesses started person worked another similar field before starting company. employment included agreement prevents servicing clients former employer operating same amount time geographical distance. regulation about employee benefits pay, well hours work working conditions safety standards. Business owners should requirements able adhere beginning business. References Beasley, M. S. (1996). An empirical analysis relation between director composition statement fraud. Review, 443-465. Carvin, A., Francisco, N. J., Vergonis, C. G. (2007). Massive, unchecked design: unconstitutional exercise executive authority Board. NYUJL 199. Imhoff, (2003). quality, corporate governance.Auditing Corporate (January Levitt Jr, A. (1998). numbers game. CPA Journal, 68(12), 14. Weiss, E. J. Thoughts Agenda Duke Law 53(2), 491-515.