Securities Regulation discusses the history of the Sarbannes-Oxley Act of 2002.|Course hero helper
Posted: February 19th, 2023
Chapter 45 Securities Regulation discusses the history of the Sarbannes-Oxley Act of 2002. Read the article on page 45-29 in your textbook and answer the question at the end of the article.
In order to answer the questions, good sources for explanation of the Act are the Securities and Exchange website at www.sec.gov for a better understanding of the Act. You may also find articles in the Wall Street Journal, Washington Post, New York Times to help you answer the questions.
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SOLUTION
The Sarbanes-Oxley Act of 2002 (SOX) was enacted in response to the accounting scandals that rocked corporate America, such as Enron and WorldCom, and to restore investor confidence in financial reporting. The Act is considered one of the most significant changes to federal securities laws in the United States since the 1930s.
SOX requires public companies to establish and maintain an adequate system of internal controls over financial reporting and to have their financial statements certified by an independent auditor. The Act also established the Public Company Accounting Oversight Board (PCAOB) to oversee the auditing profession and ensure that auditors are independent and accountable to investors.
In addition, SOX requires company officers to certify the accuracy of financial statements and imposes severe penalties for fraudulent activity, including fines and imprisonment. The Act also strengthened the penalties for securities fraud and expanded whistleblower protections for employees who report corporate wrongdoing.
Overall, the Sarbanes-Oxley Act of 2002 was intended to increase transparency and accountability in corporate America and restore investor confidence in financial reporting. The Act has had a significant impact on corporate governance and financial reporting practices, and its provisions continue to be relevant today.
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