Sarbanes-Oxley Act


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Sarbanes Oxley Act of 2002

Legislation in the United States, passed in 2002, intended to increase transparency in accounting practices. It was adopted in the wake of a series of scandals involving aggressive accounting on the part of a number of major accounting firms, notably Arthur Andersen. Among other provisions, it created the Public Accounting Oversight Board to regulate accounting firms that provide auditing services. It established and enhanced provisions for auditor independence and financial disclosures to limit potential conflicts of interest. It introduced a requirement that the chief executive officer must sign a corporation's tax return and enhanced punishments for white collar crime. Proponents argue that the Act has increased transparency in public accounting, while critics contend that it has driven business outside the United States.

Sarbanes-Oxley Act

The congressional legislation that regulates certain corporate financial activities and improves the accuracy of financial statements. Among other things, the act prohibits personal company loans to directors and officers, requires certification of financial statements by a firm's chief executive officer and chief financial officer, protects employee whistle-blowers, increases criminal penalties for securities law violations, requires disclosure of off-balance-sheet financing, and calls for improvement in the accuracy of pro forma financial statements. The act was passed in 2002 in response to widely publicized corporate accounting scandals.

Sarbanes-Oxley Act

see CORPORATE GOVERNANCE.

Sarbanes-Oxley Act

see CORPORATE GOVERNANCE.
References in periodicals archive ?
McDonough: The requirement that public accounting firms undergo regular inspections by the PCAOB is the most significant change to come out of the Sarbanes-Oxley Act.
The Sarbanes-Oxley Act directed the commission to ensure the Public Company Accounting Oversight Board began registering auditing firms by the end of April 2003.
THE SARBANES-OXLEY ACT PROHIBITS ALL REGISTERED public accounting firms from providing audit clients, contemporaneously with the audit, certain nonaudit services, including internal audit outsourcing, financial-information-system design and implementation services and expert services.
Leveraging a COSO-based framework for auditing internal financial processes, Appian's solution is focused on helping companies achieve compliance with sections 404 and 302 of the Sarbanes-Oxley Act.
Vantage Enterprises has identified the need of organizations to comply with security and privacy regulations such as HIPAA, The Gramm-Leach-Bliley Act, The Sarbanes-Oxley Act of 2002, The PATRIOT Act and those best practices dictated by organizations such as the Federal Financial Institutions Examination Council (FFIEC).
In a continuation of the cycle, a subsequent "New Economy" brought an economic boom, a bubble of "irrational exuberance" (as referred to by then-Federal Reserve Chairman Alan Greenspan) that inevitably burst in 2000, bringing another round of regulation, most significantly the Sarbanes-Oxley Act of 2002.
Indeed, section 404--which requires a company's annual report to certify exactly how effective its control and reporting procedures are--is proving to be the most challenging part of the Sarbanes-Oxley Act.
In 2002, with many journalists cheering him on, President Bush signed the Sarbanes-Oxley Act, one of many new laws that have expanded the list of corporate crimes and ratcheted up criminal penalties to terms longer than some serve for murder.
Moreover, in response to the Sarbanes-Oxley Act, companies have instituted numerous internal controls, which must be certified by management under and reviewed by independent auditors, to ensure the accuracy of their reported financial information including taxes.
Remember that the best compliance strategy begins with thoroughly studying the Sarbanes-Oxley Act, as well as any other regulations affecting your industry.
But drafting an impressive list of calls for exemptions for EU auditing firms under the Sarbanes-Oxley Act is one thing.