What is the Sarbanes-Oxley Act?

The Sarbanes-Oxley Act of 2002 is a federal law of the United States adopted in response to recent corporate and accounting scandals including those at Enron, Tyco International, and WorldCom (now MCI). These scandals resulted in a decline of public trust in accounting practices and reports. Named after sponsors Senator Paul Sarbanes (D-MD) and Representative Michael G. Oxley (R-Oh.) was passed by the House by a vote of 423-3 and the Senate 99-0. The bill is large and establishes new or enhanced for all joints of the rules of public companies, management and public accounting firms in the United States. The first and most important part of the Act establishes a new quasi-public agency, the Oversight Board Public Company Accounting, responsible for the supervision and discipline accounting firms in their roles as auditors of public companies. Some of the key provisions of the Sarbanes-Oxley Act include:- Certification of financial reports by CEOs and CFOs- The independence of auditors, including the prohibition of certain types of work for audit clients and pre-certification by the audit committee of the company of all other non-audit work- The requirement that companies listed on stock markets have independent audit committees that oversee the relationship between the company and its auditor- Case significantly greater maximum prison and business leaders that contain errors knowingly and willfully financial statements, although maximum penalties are unnecessary fines because judges generally follow the guidelines of federal sentence fixing real sanctions- Protection of workers who leave these corporate fraud whistleblowers who file complaints with OSHA within 90 days, to win reinstatement, back pay and benefits, compensatory damages, reduced orders and the fees and reasonable attorney fees.