Sarbanes-Oxley Act

sso.jpgWhy was it created?

In recent years, the number of accounting scandals have increased dramatically. It surprised many that these large corporations could have committed so much financial deception without being discovered sooner. Enron's false accounting going unnoticed caused the accounting industry to take a hard look at its standards. The Senate Committee on Banking, Housing and Urban Affairs and the House Committee on Financial Services held many hearings concerning these issues which eventually led to the creation of the Sarbanes-Oxley act on June 30, 2002.

What does it deal with?

The Sarbanes-Oxley act covers issues that deal with auditor independence, corporate governance, internal control assessment, and enhanced financial disclosure. The Public Company Accounting Oversight Board has also been established to oversee, regulate, inspect, and discipline accounting firms auditing public companies.

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