The Sarbanes Oxley Act Of 2002

1691 Words Apr 4th, 2016 7 Pages
US government in July 2002 passed the Sarbanes Oxley Act of 2002 shortly known as SOX. The act was named on Senator Paul Sarbanes and Representative Michael Oxley who was its main contributor. The act came after when a series of scandal such as Enron, WorldCom, Tyco, Global Crossing and Arthur Andersen came into the light, which resulted in the loss of investors’ money and confidence. Therefore, the main objective of SOX was to protect the interest of shareholders and general public from accounting errors and fraudulent practices done by corporations.

The act endorses companies to change the practice and regulations of accounting and auditing. It required them to maintain good financial recorded which were different than the past. The management team is held personally liable for the reliability and accuracy of the financial statements. All publically listed companies must establish a system of internal controls which must be evaluated by management at least quarterly and external auditors are required to conduct independent assessments of company’s in –house internal controls as well as report any fault or fraudulent acts they observe.

The SOX has eleven titles, out of which following sections are the most important:
Section 302 requires that senior management must certify the accuracy and reliability of financial reports released to the public. It also mandates that organization cannot evade these requirements by performing activities outside of USA.
Section 402…

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