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 ?
* SARBOX does not regulate non-profits but is a wake up call for good governance for all organizations with outside stakeholders.
The month after Paulson advocated eviscerating some Sarbox reforms, an elite group of corporate and financial leaders announced it was forming the Committee on Capital Markets Regulation to recommend ways to improve U.S.
The Securities and Exchange Commission established an Advisory Committee on Smaller Public Companies to advise it on how to apply Sarbox to these smaller companies.
Funnily enough, no one had heard of Sarbox. They've seen the perp walks, but the broader story of change isn't getting out to the general population.
Take Sarbox. We at Chief Executive and other business voices have made it abundantly clear that the law went too far.
Instituting controls that are the requisite for long-term success will more than pay for themselves, so let's make friends with Sarbox. We may find that "he" is a real friend after all.
What a great contrast in your last issue of three deeply related issues: CEO tenure, Sarbox and Bose (January/February 2005).
Do you think that we need to have revisions to Sarbox to ease some of the burdens?
As your CEO Summit participants observed, Sarbox certainly has altered the risk tolerance climate and has made being public costly for management and investors.
The Big Four's revenues are likely to climb even faster in 2005, as the firms attest to their clients' compliance with Section 404 of Sarbox, which requires public companies to certify to the SEC that their financial controls are sound.
We think CEOs should seize this opportunity to start pressing for a revision to Sarbox itself, primarily Section 404, which requires companies to have "appropriate controls" over virtually every internal process.
"Over the last few years, boards have become more diligent, more performance-driven and more in the spotlight," he says, "and Sarbox has certainly made them more involved."