About sarbanes oxley

What is Sarbanes Oxley

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Sponsored by Senator Paul Sarbanes and Representative Michael Oxley, Sarbanes Oxley is a piece of legislature passed in 2002 to monitor and guide corporations and also build confidence in investors by protecting their investments. It is often referred to as SOX. Because of the recent numbers of accounting and corporate scandals, such as Enron and Worldcom, public trust in accounting and reporting practices by major companies dwindled.

The Act establishes new standards for all US public companies, putting more efforts into managing and recording company trends, audits, financial status, etc. and also harsher punishment for those undermining US authority agencies in their investigations if such cases appear. The Act itself is comprised of 11 major sections which include extra corporate board responsibilities and punishment. The Sarbanes Oxley Act is headed by the SEC, or Security and Exchange Commission to implement these new guidelines.

Issues that the Sarbanes Oxley Act address include standards for corporate Executive, requiring them to certify the accuracy of records, as well as for Audit Committees to report and document evaluations, reviews, and opinions of the company’s progress. Also, it requires specific accounting regulations and guidelines similar to those of a public accountant. The Security and Exchange Commission has established a Public company and Accounting Oversight Board for this purpose specifically.