Notifications
Clear all
Topic starter 01/08/2025 10:38 pm
📊 The Sarbanes-Oxley Act of 2002 (SOX) is a landmark U.S. federal law designed to protect investors by improving the accuracy and reliability of corporate financial disclosures. It was passed in response to major accounting scandals like Enron, WorldCom, and Tyco, which shook public trust in financial markets.
🧩 Key Objectives of SOX
- Enhance corporate accountability
- Strengthen internal controls over financial reporting
- Improve transparency in financial statements
- Increase penalties for fraudulent activity
🏛️ Major Provisions
| Section | Purpose |
|---|---|
| Section 302 | Requires CEOs and CFOs to personally certify the accuracy of financial reports |
| Section 404 | Mandates internal control assessments and independent audits of those controls |
| Section 802 | Sets rules for record retention and penalties for destroying documents |
| Section 906 | Imposes criminal penalties for certifying misleading financial reports |
🏢 Who Must Comply?
- Publicly traded companies in the U.S.
- Accounting firms that audit public companies
- Some provisions also apply to private companies (e.g., evidence tampering)
🔐 Why It Matters
- Restores investor confidence
- Reduces risk of corporate fraud
- Promotes ethical business practices
- Holds executives personally accountable
