Sarbanes-Oxley Act

Sarbanes-Oxley Act (SOX) is well-known among the accounting industry due to its significant changes to United States securities laws since the New Deal in the 1930s. As a accounting marjor student, you must know the brief background of this Act. Here’s below will tell you something about the Act.

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 United States federal law passed in response to a number of major corporate and accounting scandals involving prominent companies in the United States. These scandals resulted in a loss of public trust in accounting and reporting practices. The legislation is wide ranging and establishes new or enhanced standards for all US 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.

The Act covers issues such as establishing a public company accounting oversight board, auditor independence, corporate responsibility and enhanced financial disclosure. It was designed to review the dated legislative audit requirements, and is considered one of the most significant changes to United States securities laws since the New Deal in the 1930s.

The Act came in the wake of a series of corporate financial scandals, including those affecting Enron, Tyco International, and WorldCom (now MCI). 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 97-0.

Source: http://www.wiki-mirror.be/index.php/Sarbanes-Oxley_Act

The SOX represents a major revolution in the development of corporate governance. In Greater China its impact can be seen in many ways:

• there are over 50 Hong Kong or Chinese companies that are SEC registrants because of US debt or equity;
• there are numerous companies in Greater China that are subsidiaries or joint ventures of overseas SEC registrants;
• many non-SEC companies are looking to Sarbanes-Oxley as an indication of “best practice" corporate governance;
• employees, directors, audit committees and auditors are all directly affected by the many new rules and principles contained within the Act and the subsequent SEC regulation.

Source: http://www.pwchk.com/home/eng/sarbanes_oxley.html