Jun 20 2011

What is the Sarbanes-Oxley Act?

Category: Accounting,Goverment

Answer:

Accounting StandardsThe Sarbanes–Oxley Act is a U.S. federal law that was established to improve accounting standards for all publicly traded companies after scandals near the turn of the century (Worldcom, Enron, etc.) decreased confidence in US security markets. It effectively changed the way executives and board members interact with each other and with corporate auditors. The Sarbanes–Oxley Act created new financial reporting responsibilities including the observance of new internal controls and procedures created to ensure the validity of financial records. The Act also established the Public Company Accounting Oversight Board, or PCAOB, charged with overseeing, regulating, inspecting and disciplining accounting firms in their roles as auditors of public companies. It is named after the sponsors, Senator Paul Sarbanes (Maryland) and Representative Michael Oxley (Ohio).


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