The Sarbanes-Oxley Act of 2002

1668 Words Jun 8th, 2012 7 Pages
The Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002
The Act & Impact
ACC 410, Jackie Lewis, Ph.D.

Abstract
The Sarbanes-Oxley Act, officially named the “Public Company Accounting Reform and Investor Protection Act of 2002”, is recognized to be the most noteworthy U.S. federal disclosure and corporate governance legislation since the Securities Act of1933 (the Securities Act) and the Securities Exchange Act of 1934 (the Exchange Act). Furthermore, the provisions of the Act are momentous enough that it is considered by many to be the most significant change to the federal securities laws in the U.S. since the New Deal.

The Sarbanes-Oxley Act of 2002
The Act & Impact
The Sarbanes-Oxley Act of 2002 was signed
…show more content…
This forced into effect some of the most readily available reform proposals for publically traded companies, of which many had existed for years without sufficient political imperative to be enacted. (The Institute of Internal Auditors. “The Sarbanes-Oxley Act of 2002: Effect on Audit Committees at Publically Traded Companies.” January 2004. Accessed May 31, 2012 from: http://www.theiia.org/.)
New levels of auditor independence and personal accountability for CEOs and CFOs are provided by the Act. Additional accountability for corporate Boards, as well as increased criminal and civil penalties for securities violations, increased disclosure regarding executive compensation, insider trading and financial statements are also presented under SOX. (The Institute of Internal Auditors: “The Sarbanes-Oxley Act of 2002: Effect on Audit Committees at Organization Not Publicly Traded.” January 2004. Accessed May 31, 2012 from: http://www.itaudit.org/)
The provisions of the act apply, not only, to U.S. companies that are required to file annual reports with the Securities and Exchange Commission (SEC), but also to foreign companies that are listed in the U.S. or obligated to report to the SEC periodically. Title I of the Sarbanes-Oxley Act stipulates that a new Public Company Accounting Oversight Board (PCAOB) will be appointed and overseen by the SEC. The PCAOB board consists of five full-time members who are