Sarbanes Oxley Act

Sarbanes Oxley Act

The Sarbanes-Oxley Act of 2002 is also known as the Public Company Accounting Reform and Investor Protection Act of 2002 and commonly called SOX or Sarbox. SOX was passed during 2002 as a result of a number of major accounting scandals that took place in the corporate world like Enron, WorldCom, Tyco International. SOX is named after Paul Sarbanes, the Senator and Oxley the Representative. The Act was approved by the House by a vote of 423-3 and by the Senate 99-0.

The Act establishes a new agency, the PCAOB - Public Company Accounting Oversight Board, which is charged with overseeing, regulating, inspecting, and disciplining accounting firms in their roles as auditors of public companies. The Act also covers issues such as auditor independence, corporate governance and enhanced financial disclosure. It is considered by some as one of the most significant changes to US Laws since 1930.