What is Sarbanes-Oxley?

Answer 1

Sarbanes-Oxley Act Of 2002 - SOX

An act passed by U.S. Congress to protect investors from the possibility of fraudulent accounting activities by corporations.

Investopedia Says: The rules and enforcement policies outlined by the SOX Act amend or supplement existing legislation dealing with security regulations. The basic outline is as follows:

1. Establishment of a Public Company Accounting Oversight Board, where public companies must now be registered.

2. Strict auditor regulation and control by means of auditing committees and inspecting accounting firms.

3. Heightened corporate responsibility for any fraudulent actions taken.

4. Stricter disclosure within company financial statements, and ethical guidelines to which senior financial officers must adhere.

5. Guidelines for analyst conflicts of interest.

6. Authorities available to the Commission and the Federal Court, as well as required broker and dealer qualifications.

7. Enforcement methods available for punishment of activities deemed criminal by the Act.

Answer 2

The worst bill to go through congress in years.

The average public corporation's total operating budget has more than TRIPLED due to this law. Smaller companies simply cannot comply and survive.

The law is invasive. Companies, as a sheer matter of competitive survival, have as much right to privacy as you and I.

This law is the equivalent to the IRS contacting you after processing your tax return, and requiring you to show irrefutable evidence that you had no income other than what was claimed. How would you do that? You'd have to pay auditors to scour all of the entire world's banking and financial records to ensure there were no accounts tied to your social security number. Oh, then you'd have to do the same for every individual with whom you'd had any personal or official contact over the past year, ensuring they aren't in collusion. Then you'd have to plow up your yard and every piece of real estate you own to ensure there are no mayonnaise jars buried, etc., etc., etc...

Oversight of retirement programs, the original axe that the authors of this bill claimed to be grinding, is much better accomplished by the provisions of the new Pension Protection Act. It shifts the burden of that oversight to the individual and the financial planning community and encourages greater involvement of the employee in his own program. This act would have much better served the employees of Enron and Worldcom.

Answer 3

It's an act passed by congress in response to corporate corruption by companies like Enron and Worldcom. It relates to corporate governance and responsibility. It establishes an oversight board and requires the CEO and CFO to verify everthing on the financial statements is true. It is much more in depth, but those are the basics.