Office Overview

SOX Act: Strengthening Corporate Governance and Financial Reporting

The Sarbanes-Oxley Act (SOX) is a United States law enacted in 2002 with the aim of enhancing corporate governance and the reliability of financial reporting. This article elaborates on the background, objectives, and key provisions of the SOX Act.

1. What is the SOX Act?
2. What are the Objectives of the SOX Act?
3. What are the Key Provisions of the SOX Act?

What is the SOX Act?

The Sarbanes-Oxley Act is a law passed in the United States in 2002, intended to improve corporate governance and the reliability of financial reporting. This law aims to prevent fraudulent activities and misreporting by corporate boards of directors and officers, aiming to restore the trust of investors and the public.

What are the Objectives of the SOX Act?

The primary objective of the SOX Act is to enhance transparency and reliability in corporate governance and financial reporting. Specifically, it strengthens the responsibilities of corporate boards of directors and audit committees and establishes frameworks to ensure the accuracy and transparency of financial reporting. Additionally, enhancing internal controls and improving accounting audits to prevent fraudulent activities and misreporting are also significant objectives.

What are the Key Provisions of the SOX Act?

The SOX Act includes numerous provisions, but some of the most important ones can be highlighted. Firstly, it reinforces the responsibility of CEOs and CFOs to ensure the accuracy and transparency of corporate financial reporting. Additionally, companies are required to enhance their relationships with external auditors to improve the assessment of internal controls and the independence of accounting audits. Furthermore, the SOX Act includes detailed provisions regarding internal control reporting, board composition, and accounting audit practices.

The SOX Act is a significant law aimed at improving corporate governance and the reliability of financial reporting. This law seeks to strengthen the responsibilities of corporate boards of directors and audit committees and ensure transparency and accuracy in financial reporting.