Sarbanes Oxley Act of 2002
Sarbanes Oxley Act of 2002

See Also:
Securities Act of 1933
Securities Exchange Act of 1934
Audit Committee
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


The Accounting Gap Between Large and Small Companies

The Accounting Gap: It’s unfortunate, but true. A large gap exists between the accounting departments of large or publicly traded companies and smaller or private companies. In our past 25 years of consulting we’ve noticed that more often than not, these smaller/private companies will fill the gap with Bookkeepers, rather than the degreed Accountants/CPAs they

Read More »

The Struggles of Private Company Accounting

Building your Accounting Department… When I meet a business owner operating at a successful $10+ mil in revenue I often hear them say “My CPA…” and I immediately know they are referring to a tax CPA. One thing ALL entrepreneurs have in common is that they have to file a tax return. So from day

Read More »

Financial Ratios

See also:Quick Ratio AnalysisPrice to Book Value AnalysisPrice Earnings Growth Ratio AnalysisTime Interest Earned Ratio Analysis Use of Financial Ratios Financial Ratios are used to measure financial performance against standards. Analysts compare financial ratios to industry averages (benchmarking), industry standards or rules of thumbs and against internal trends (trends analysis). The most useful comparison when

Read More »


Financial Leadership Workshop

MARCH 28TH-31ST 2022


Financial Leadership Workshop


June 12-15th, 2023

WIKI CFO® - Browse hundreds of articles