Sarbanes-Oxley Act Of 2002

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Sarbanes Oxley Act of 2002 ➢ The Sarbanes - Oxley Act of 2002 (SOX) was enacted in response to corporate corruption which caused widespread financial loss by shareholders due to misleading business practices. SOX aims to protect shareholders through enhanced governance, corporate accountability, formal internal controls, transparency from executives, requiring full disclosure in financial reporting, and compliance monitoring ➢ The changes implemented by SOX are guided by the principle of independent oversight. The overall goal, as stated above, is protecting shareholders, and this is accomplished with intricate checks and balances in corporate accounting. ➢ The Securities and Exchange Commission (SEC) is the administrative body of the U.S. government that handles federal securities laws (Reed et al., 2016). Their mission involves the protection of investors, capital formation, and maintenance of a fair and efficient market. ➢ The passing of the Sarbanes - Oxley Act not only formed the PCAOB but also instilled it with the authority to enforce penalties for securities fraud on public corporations.

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