Auditing and Assurance Services 9th Edition by Alvin Arens,Mark Beasley,Randy Elder

Exercise 30

Critics of the Sarbanes-Oxley Act do not believe the Act will be effective at deterring accounting frauds because it primarily relies on specifying new crimes and higher penalties (i.e., increasing the maximum fine and prison terms). Critics argue that if corporate executives are not deterred by the prospect of 5 or 10 years in prison (which existed pre-Sarbanes), the threat of imprisonment will have little or no practical effect no matter what the maximum is raised to. Thus, critics conclude that the Act was more of an expression of political outrage than good policy.
Proponents of the Act believe the new crimes, increased penalties, and the other provisions in the Act will be effective at significantly reducing corporate accounting frauds.
Required:
Provide arguments for both sides of the debate and formulate your own opinion.