Sample English Paper on The Sarbanes-Oxley Controls and procedures

The Sarbanes-Oxley Control and Procedures are the requirements, measures, and guidelines that are to be followed by Amazon in an attempt to minimize the fraud occurrence and other significant corporate scandals that may arise. These procedures apply to the accounting and financial departments since they are involved in data acquisition and storage. Each of the departmental officials is assigned responsibilities which are in accordance with the  Amazon Sarbanes-Oxley Act of 2002. The CFO is mandated to approve and sign all financial reports and statements as well as the tax return of the corporation he is entitled. The CEO has similar responsibilities as the CFO. The Controller is an assistant to the CEO or the CFO in the preparation of financial statements (Bamber, & Bamber, 2006).

The Sarbanes-Oxley compliance procedure activity involves mainly the internal control system plan and corporate responsibility plan.  The Amazon’s internal control structure and procedures feature prominently in Section 404 of the SOX act. This section requires a publicly-held company’s auditor to attest to and report on management’s assessment of its internal control. The standards used by the auditors are prescribed by the Public Company Accounting Oversight Board (PCAOB). The AICPA has consistently urged on the implementation of Section 404(b) for all publicly held companies in the belief that all investors should have equal benefits as well as protection (Zhang, 2007). Greater transparency and improved financial reporting have been achieved in the process and the business operations remain successful in the long run.

The 404 section is the most complicated and most expensive to implement. These controls are in two categories; Preventive controls and detective controls. The preventive control employed by Amazon companyis mostly associated with more than one party. For instance, in an attempt to keep unauthorized payment from being issued the accounts department would segregate the duties such that one person approves the invoice, the other prepares payment and a third party signs the check. Detective controls aims at identification of errors and irregularities the have already occurred. Monthly reconciliation of cash accounts on a basis is such an example.

The primary areas of expanded auditor focus under 404(b) include; enhancement of transaction flow analysis and documentation, improvement of key control descriptions and operating evidence, incremental procedures to validate the design adequacy and operating effectiveness of internal control at third-party service providers and monitoring of administrative access rights to systems and applications. The expansion provides a variety of bases to consider in the validation process. Control of inadequate methods of operations renders it difficult to come up with the most sufficient results although some estimation remain necessary for the purpose of evidence. (Bamber, & Bamber, 2006).

Section 302 of the Sarbanes-Oxley Act is mainly involved with the corporate responsibility for financial reports. Under this section, the CEO’s and the CFO’s are to certify that the financial statements are accurate and the disclosure of reports presents all aspects of the financial condition and operations of the Amazon Company. The CEO and CFO, however, have a challenge of deciding whether he or she can certify to the accuracy and wholesomeness of the disclosure in a Form 10-K and 10-KSB in that until the report is filed and specific information can be disclosed. Also, under this section, a public company is required to conduct an evaluation of the company’s internal disclosure controls and procedures within three months of filing either the quarterly or annual report for


The Sarbanes-Oxley Act of 2002 has had an extreme effect on corporate governance of Amazon in the U.S. It has strengthened the audit committees of public companies by allowing the approval of numerous audit and non-audit services and complaints handling regarding the management’s accounting practices. This act has placed a strict requirement on the top managers concerning the accuracy of financial reporting. The disclosure requirement has also become strengthened by requiring the public companies to disclose any proformas statements about their appearance under the Generally Accepted Accounting Principles (GAAP), any materials off-balance sheet and reporting of their stocks transactions to the Securities and Exchange Commission (SEC). Of the most benefit within the act is section 404 which demand extensive internal control test which must be inclusive of the internal control reports from their annual audits. The above measures have positively impacted on the Amazon investors’ confidence in financial markets and minimize fraudulent incidences. However, the Act also gets faced with various shortcomings. The act is seen to adversely affect the private and non-profit in that they are left with few auditors to choose from due to the high demand for auditors by the public sector. Besides, the audit fees have drastically increased, and also bank financing has decreased as well for private and non-profit firms. It is therefore recommendable in the future that such Acts should be thoroughly investigated of their implications before enacting them.

Other sections covered in the annual report

Risks in operation

The foreign currency exchange risk poses as one of the main challenges experienced by Amazon during operations. As the local currency determines how activities are carried out, the various occasions have indicated low income compared to the numerous expenses incurred during the operation periods. The recurrent fluctuation such as that for the year 2000 resulted in unfavorable conditions for business. Lack of local control by Amazon as a private corporation to the specific regions in the world inhibits any capabilities to rectify the situations. The PAECS and Euro denominations experienced at the close of the market in the same year from 690 to 624 million Euros representing a deficit of millions resulting from the exchange rates (Jensen, & Xiao, 2001).  A debt principle of 615 million Euros got set apart to cater for the offsets brought about by the changes. Investment risk also poses a challenge to equity securities. Combination of public and private investments leads to cases of losses which get perceived to originate from the public sector as it remains the most unpredictable area of operation.

Business combinations

The year 1999 towards 2000 marked Amazon’s incorporation with Alexa internet,, Acme electric motor Company,, and Basic Toys Company. Over 780 million dollars got expended for these incorporations. The plan for acquisition intended to combine efforts for the uniformity of stocks and cash providing high confidence that the program would work out for the best of planned output. However, more incorporation costs became evident for the other types of transactions involving such transfer of ownership from the original owners to the current ones. However, the year 2000 incurred no acquisition expenses as none occurred throughout the operational period (Bamber, & Bamber, 2006).

Leases and market agreements

The Amazon Company raises more avenue from office leases through non-cancelable terms and capital leases. For the three years of 2000, 1999 and 1998, the resulting incomes amounted to 98, 43 and 8 million dollars respectively indicating progressive achievements through the years. Fixed-fee commitments represent other engagements in the year 2002 through 2006 where the resulting duties sum to $19 million. The amounts derived from such investments usually get based on the terms of agreements between the parties (McMahan, 2006).

Legal proceedings

Federal lawsuits were filed to Amazon as a limited liability company together with the subsidiary namely Alexa. The allegations argue that Alexa’s data monitoring, storage, and tracking of internet usage paths infringes the law and users. The practices gat believed to violate the federal regulations on prohibiting unauthorized access, unfair competition, illegal interception of private networks, and trespass against privacy. The unacceptable activities by Alexa as claimed by the affected groups intended to seek for compensation of any lateral damage as a result of acting against the agreed upon terms between the clients and the service provider (Zhang, 2007).  The pending case got prospected to have the Amazon Company and the subsidiary take a winning ground for the genuine reasons behind such actions based on intentions. Such cases remain common and the authorities rely on the side that takes the best of public interest.



Bamber, E. M., & Bamber, L. S. (2006). Using 10-K reports brings management accounting to life. Issues in Accounting Education, 21(3), 267-290.

Zhang, I. X. (2007). Economic consequences of the Sarbanes–Oxley Act of 2002. Journal of accounting and economics, 44(1-2), 74-115.

McMahan, J. (2006). The Handbook of Commercial Real Estate Investing: State of the Art Standards for Investment Transactions, asset Management, and Financial Reporting. New York: McGraw-Hill.

Jensen, R. E., & Xiao, J. Z. (2001). Customized financial reporting, networked databases, and distributed file sharing. Accounting Horizons, 15(3), 209-222.