Analyzation of Audit Procedures in the Wake of the Early 2000s Accounting Scandals

Enron, WorldCom, and Tyco International were companies that operated in different industries and had different levels of net profit for decades. However, these companies had one pivotal thing in common: accounting fraud. In the early 2000s, accounting scandals from large companies created a major impact on the financial markets, causing Congress to take action to increase investor protection through the origination of the Sarbanes-Oxley Act of 2002. The Act was meant to restore investor confidence through strengthened disclosures and auditing requirements for public corporations. However, even with the creation of this new Act from Congress, fraud is still prevalent today, whether in private, public, or governmental entities. Thus, there needs to be an implementation of new audit procedures or modifications of existing procedures to further Congress’s main objective of protecting the investor and shareholders of companies in the United States. This research paper will outline the three main accounting scandals stated at the beginning, which will then lead to the explanation of the Sarbanes-Oxley Act of 2002. To conclude, new audit procedures and modifications of existing audit procedures will be explored that will inevitably help deter fraud in public companies