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Sarbanes Oxley

Sarbanes Oxley| Attorneys, Lawyers & Legal Resources

The Sarbanes-Oxley Act of 2002, also known as the Public Company Accounting Reform and Investor Protection Act of 2002, is a piece of legislation signed after the now infamous corporate accounting scandals at companies such as Enron, Tyco International, Peregrine Systems, and WorldCom came to light. These financial fiascoes caused mass distrust among the general public in terms of accounting and reporting practices. Named in honor of Senator Paul Sarbanes and Representative Michael Oxley, this legislation implemented new or superior standards for all US public company boards, administration, and accounting firms to comply with.

When it was established, it fostered considerable changes in how financial practice and corporate governance are regulated. The Sarbanes-Oxley Act is composed of 11 doctrines ranging from corporate board responsibilities to criminal punishment. The Securities Exchange Commission handles the task of making decisions regarding conditions of compliance with the new law. Along with the Sarbanes-Oxley Act came the Public Company Accounting Oversight Board, whose duties include overseeing, regulating, reviewing, and disciplining accounting firms who audit public corporations. The act addresses topics such as auditor independence, corporate governance, internal control assessment, and enhanced financial disclosure as well.