FR U1IP

Sarbanes-Oxley Act
Student’s Name:
Institutional Affiliates:

Introduction
Sarbanes-Oxley Act of 2002 commonly abbreviated as SOX or Sarbox is a federal law in the United States sets new requirements for all public companies boards, corporate governance, and the public accounting firms (Jain & Rezaee, 2016). It was enacted on July 30, 2002, and it is also known as Investors Protections Act or transparency Act as it intends to protect the interest of the investors. The Act also has got provisions that apply to the private firms such as intentional destruction of evidence to compromise a federal investigation.
Development
Sarbanes-Oxley Act of 2002 was developed to protect the shareholders and restore trust in the public companies following the mega accounting scandals that took place in the early 2000s (Jain & Rezaee, 2016). Investors lost much of their funds in the commonly known Enron, WorldCom, Arthur Anderson, and many others Scandals which led to the need for regulation of the public corporations. The various section of the Act describes how the board of directors in the public companies should carry the responsibilities in a case of misconduct. The bill was named after its sponsors Paul Sarbanes and Michael Oxley whose primary aim was to ensure that the top management of every firm certifies the accuracy of the financial information. The Bill has got eleven sections, and it proposes penalties to be applied in case of the fraudulent financial activit…