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Implementation of Section 404 of the Sarbanes-Oxley Act in a Swedish Environment
Halmstad University, School of Business and Engineering (SET).
Halmstad University, School of Business and Engineering (SET).
Halmstad University, School of Business and Engineering (SET).
2007 (English)Independent thesis Basic level (degree of Bachelor)Student thesis
Abstract [en]

Problem Area: The American company Enron was the seventh largest company notated on the stock market when it went bankrupt due to extensive accounting frauds in December 2001. By manipulating the financial reports, the management of Enron was able to hide huge debts through transactions with external companies. Therefore, they were able to deceive the public by reporting huge profits while the company, in reality, was generating a negative result. As a result of the bankruptcy, 40 billion dollars disappeared and tens of thousands of employees lost their jobs and pension savings. After the Enron scandal, further accounting frauds were discovered in the US, such as WorldCom and Tyco. The WorldCom bankruptcy is, as of today, the largest bankruptcy in the world. Following the scandals and the accounting frauds in a number US companies, the US congress passed a law – the Sarbanes-Oxley Act of 2002 (SOX).

Purpose: The purpose of the study is to examine how companies in Sweden have managed to implement SOX Sec. 404 – for ensuring internal control. The researchers will examine how different Swedish companies have approached the issue and how they have chosen to implement SOX sec. 404 in their organisation. Have some companies been more effective in their implementation than others and why? Limitations: SOX cover several areas around internal control and reporting. The authors will mainly study Sec. 404, which treats internal control over financial reporting, and is the section that has demanded most effort to comply with. Methodology: The study was conducted by a qualitative research method by conducting personal interviews with respondents from three different companies in Sweden. All of the participating companies in the study are obliged to comply with SOX. Conclusion: The researchers in this study have identified differences in the approach towards SOX-compliance by the participating organisations. The lack of how to implement guidance and the different approaches taken by companies towards SOX compliance may suggest that there is no supreme implementation guide that is suitable for all companies in order to achieve compliance. Proposals for Further Research: As the implementation phase just recently was completed the authors would like to find out how companies are sustaining compliance in the future. Researchers could focus on sustainable compliance as compared to this study where sustainable compliance is merely limited to one section. In addition, it would be interesting to carry out an in-depth study on one company to evaluate their implementation on a deeper level. This would give the researcher a deeper understanding which is more difficult to achieve when conducting a comparative study.

Place, publisher, year, edition, pages
Högskolan i Halmstad/Sektionen för Ekonomi och Teknik (SET) , 2007.
Keywords [en]
SOX, Implementation
Identifiers
URN: urn:nbn:se:hh:diva-990Local ID: 2082/1351OAI: oai:DiVA.org:hh-990DiVA, id: diva2:238208
Uppsok
Social and Behavioural Science, Law
Available from: 2007-10-12 Created: 2007-10-12 Last updated: 2007-10-12

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