The Sarbanes Oxley ( Sox ) Act Essays

727 Words 3 Pages
In 2002, the Sarbanes-Oxley (SOX) Act was passed by congress and signed into law by President George W. Bush. SOX was written as a response to several major accounting scandals that occurred at large companies (including Enron, WorldCom, and Tyco) in the early 2000’s. These scandals forced capital providers and the general public to question the judgement of public accounting firms as well as at the overall reliability of the financial reporting and audit process. The requirements included in SOX were designed to improve audit quality, increase the reliability of financial reporting, bolster corporate governance, and re-establish public and investor confidence in the financial reporting process. Some of the most impactful aspects of the Act include the creation of the Public Company Accounting Oversight Board (PCAOB), the requirement that corporate executives personally attest to the accuracy of financial statements, and Section 404, which requires management to detail the effectiveness of the company’s internal control processes. Title I of the Sarbanes-Oxley Act created the PCAOB and ended years of self-governance by public accounting companies (EY). The PCAOB is composed of five members, all of whom are appointed by the Securities and Exchange Commission to serve the Board on a full-time basis for a maximum of two terms of five years each. PCAOB members cannot be involved with any other businesses or organizations while serving on the Board, which minimizes…

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