Sarbanes Oxley Act of 2002

Sarbanes Oxley Act of 2002

See Also:
Securities Act of 1933
Securities Exchange Act of 1934
Audit Committee
Auditor
American Institute of Certified Public Accountants – AICPA

Sarbanes Oxley Act of 2002

The Sarbanes Oxley Act of 2002 or SOX for short is further regulation of the secondary market by requiring further internal controls within companies and extensive audit practices. The Sarbanes Oxley Act 2002 resulted from several accounting scandals that plagued the early 2000s such as Enron, Tyco, Worldcom, and several others.

Sarbanes Oxley Act of 2002 Explained

Bi-partisan legislation by Paul Sarbanes (D-MD) and Michael Oxley (R-OH) created the Sarbanes-Oxley Act. The creation of SOX regulation was a result of investors mistrust in the market place after several scandals were revealed in the market. Consider Sarbanes Oxley an extension of the Securities Exchange Act of 1934. Sarbanes-Oxley is most known for the creation of the PCAOB, an extension of the SEC, who regulate accounting firms who audit companies. They also emphasize internal controls within businesses. These internal controls and audits involved regulation over not just employees, but both board members and management who neglected their duties. Separation of duties became a big factor in the regulation and rotation of tasks. As a result, no one employee would be able to keep a scandal going for very long.
After, SOX was put into place there became a concern by some after several years that it was too regulatory. And the costs associated with the new regulations were too high to maintain. It has thus been argued that there needs to be a softened form of Sarbanes Oxley as to prevent movement away from U.S. markets as well as to reduce a barrier to entry formed from entering the market. However, the US recently revisited the law in June 2010, and it is still fully operative.
If you want to overcome obstacles and prepare how your company is going to react to external factors, then download your free External Analysis whitepaper.
sarbanes oxley act of 2002
[box]Strategic CFO Lab Member Extra
Access your Projections Execution Plan in SCFO Lab. The step-by-step plan to get ahead of your cash flow.
Click here to access your Execution Plan. Not a Lab Member?
Click here to learn more about SCFO Labs[/box]
sarbanes oxley act of 2002

ARTICLES YOU MIGHT LIKE

The Struggles of Private Company Accounting

Hiring the right accountant  When I meet a business owner operating at a successful $10 million in revenue, they often mention, “My CPA”… I immediately know that CEO/Entrepreneur is referring to their Tax CPA.  That is because one thing that all Entrepreneurs have in common is that they must file a tax return.  So, from

Read More »

IN CRISIS? GET A STRATEGIC CFO! – CEO Blindspots Podcast

Friend of the firm, Birgit Kamps, recently had Strategic CFO President, Dan Corredor, as a guest on her podcast, CEO Blindspots. CEO BLINDSPOTS HOST: Birgit Kamps. She was speaking five languages by the age of 10, and lived in five countries with her Dutch parents prior to becoming an American citizen. Birgit’s professional experience includes starting

Read More »

SHRM calls ICHRA the 401K for Group Health Benefits

Fed-up with group health insurance? ICHRA is the new way to offer great health benefits and avoid ACA penalties, SHRM calls it the 401K for group health benefits.  In 2020 the Department of Labor, HHS and IRS changed the rules for employer health benefits. They changed the Affordable Care Act mandates and penalties for every

Read More »

JOIN OUR NEXT SERIES

Financial Leadership Workshop

MARCH 28TH-31ST 2022

SHARE THIS ARTICLE

JOIN THE NEXT STRATEGIC CFO™ SERIES

Strategic CFO™ Financial Leadership Workshop
The Art of the CFO®

Days
Hours
Min
Sec

September 12-15th 2022