|This paper discusses briefly the reasons the Sarbanes-Oxley Act was enacted, who enacted it, what are the major changes relative to | |accountability and compliance, and what value will this Act add to the accounting profession and publicly held organizations. |
Reasons for the Act
The Sarbanes-Oxley Act of 2002 is legislation enacted by Congress in reaction to corporate financial scandals, including those affecting Enron, Arthur Andersen, and WorldCom. This Act often referred to as SOX or Sarbox, is named after sponsors U.S. Senator Paul Sarbanes (D-MD) and U.S. Representative Michael G. Oxley (R-OH). It is designed to "protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws."  The Act set new or enhanced standards for all U.S. public company boards, management and public accounting firms.
The Act provides for new levels of auditor independence; personal accountability for CEOs and CFOs; additional accountability for corporate Boards; increased criminal and civil penalties for...