Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 (Pub. L. No. 107-204, 116 Stat. 745, also known as the Public Company Accounting Reform and Investor Protection Act of 2002 and commonly called SOX or Sarbox; July 30, 2002) is a controversial United States federal law passed in response to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, Peregrine Systems and WorldCom (recently MCI and now currently part of Verizon Business). These scandals resulted in a decline of public trust in accounting and reporting practices. Named after sponsors Senator Paul Sarbanes (D-Md.) and Representative Michael G. Oxley (R-Oh.), the Act was approved by the House by a vote of 423-3 and by the Senate 99-0. The legislation is wide ranging and establishes new or enhanced standards for all U.S. public company boards, management, and public accounting firms. The Act contains 11 titles, or sections, ranging from additional Corporate Board responsibilities to criminal penalties, and requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the new law. Supporters of these reforms believe the legislation was necessary and useful while critics believe it does more economic damage than it prevents. Read original article

The first and most important part of the Act establishes a new quasi-public agency, the Public Company Accounting Oversight Board, which is charged with overseeing, regulating, inspecting, and disciplining accounting firms in their roles as auditors of public companies. The Act also covers issues such as auditor independence, corporate governance and enhanced financial disclosure. It is considered by some to be one of the most significant changes to United States securities laws since the New Deal in the 1930s.

Contents

• 1 History
• 2 Provisions
• 3 Overview of Section 404 Requirements
• 4 Internal control certifications
• 4.1 Information technology and SOX 404
• 4.2 Impact of SOX on the Corporate IT Department
• 5 Analyzing the Cost-Benefit of SOX 404
• 6 The effect of the Sarbanes-Oxley Act on Non-US companies
• 7 The future of SOX 404 compliance
• 8 Legislative information
• 9 Law Review commentaries
• 10 References
• 11 See also
• 11.1 Similar laws in other countries
• 12 External links
• 12.1 Forum
• 12.2 Articles
• 12.3 Surveys