The Sarbanes-Oxley Act of 2002 (SOX) is a crucial piece of legislation in the United States that was enacted in response to the financial scandals of major corporations such as Enron, WorldCom, and Tyco. These scandals shook investor confidence and called for improved standards in financial reporting and corporate governance.
SOX aims to protect investors by improving the accuracy and reliability of corporate disclosures in financial statements and ensuring that companies implement more rigorous internal controls. This law impacts all public companies and their management, as well as public accounting firms. It requires that companies adhere to new standards for financial transparency and corporate responsibility.
SOX is fully in force and applies to all public companies in the US. Compliance with this act is essential for maintaining legal standing and public trust, and it continues to evolve with ongoing developments in corporate governance and financial reporting standards.
