User:JihanChlon/sandbox

The Sarbanes-Oxley Act

The Sarbanes-Oxley Act is an act of 2002. In response to various financial scandals, the U.S. Congress passed the Sarbanes-Oxley Act. This act also can be called Sarbox or Sox. First of all, Sarbanes-Oxley sought to enhance the integrity of corporate financial reporting and better regulate the accounting profession. The Sarbanes-Oxley Act applies for every company which is registered by SEC; therefore, international companies are included as well.

Furthermore, it regulates and set standards for companies to protect shareholders and the public from accounting errors as well as generates more transparency between reporting and the markets.

Thus, the Sarbanes-Oxley Act enhanced corporate financial reports and made several reforms in the accounting profession. Enhancements occurred in the financial statements; therefore, the Sarbanes-Oxley Act requires a company's executive chief officer and chief financial officer to clarify the precision of its financial reports. Moreover, to ensure the mentioned accuracy of financial reports, internal controls are required. Accordingly, each financial report required an internal control report to prevent fraud. Furthermore, the CRO has to be aware of everything occurring in his company on a daily basis, but he must also be current on all of the requirements from the SEC. In addition, the CRO restrains corporate risk by managing compliance.