The Sarbanes-Oxley Act of 2002 commonly called SOX is a United States federal law passed in response to a number of major corporate and accounting scandals including those affecting Enron, Peregrine Systems and WorldCom.
These scandals resulted in a decline of public trust in accounting and reporting practices. Named after sponsors Senator Paul Sarbanes and Representative Michael G. Oxley, the Act was approved by the House and by the Senate.
The legislation is wide ranging and establishes new or enhanced standards for all U.S. public listed companies and public accounting firms.
The Act contains 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.
Some believe the legislation was necessary and useful, others believe it does more economic damage than it prevents, and yet others observe how essentially modest the Act is compared to the heavy rhetoric accompanying it.
