Sarbanes–Oxley, Sarbox or SOX, is a United States federal law which was introduced in 2002. It is also known as the “Public Company Accounting Reform and Investor Protection Act” and “and 'Corporate and Auditing Accountability and Responsibility Act”. The main objective of the act is to protect investors by improving the accuracy and reliability of corporate disclosures. New aspects are created by SOX act for corporate accountability as well as new penalties for wrong doings. It was basically introduced after major corporate and accounting scandals including the scandals of Enron, WorldCom etc so that the same kind of scandals do not repeat again.
There are 11 titles on the act. Each title ...view middle of the document...
It requires the financial executives to report accurately through internal control, appoint auditor to report on those control. It also requires informing public for any deficiencies or changes in financial conditions.
5. Analyst Conflicts of Interest:
This section contains rules which are designed to stimulate greater public confidence in securities research, and to protect the objectivity and independence of securities analysts.
6. Commission Resources and Authority:
This title defines qualifications of associated persons of brokers and dealers and circumstances when a person can be restricted from practicing these activities. It also defines the conditions under which the commission may censure any person, or deny, temporarily.
7. Studies and Reports:
The controller general of USA and the SEC is mandated to perform various studies and report their findings according to this title. It includes the study and report regarding the consolidation of public accounting firm which requires identifying the factors that have led to the consolidation of public accounting firm, the present and future impact of the condition etc. Not only that, there must be studies and reports on violators and violations, investment banks, credit rating agencies, enforcement acts.
8. Corporate and Criminal Fraud Accountability:
This title may be cited as the ‘‘Corporate and Criminal Fraud Accountability Act of 2002’’. It includes sections for criminal penalties for destruction, alteration, or falsification of financial records. Anyone who destroys, mutilates, conceals, covers up any record, document shall be fined under this title, imprisoned not more than 20 years, or both. It also has sections regarding the statute of limitations of fraud and the protection of employees and publicly traded companies who provide evidence of fraud.
9. White Collar Crime Penalty Enhancement:
This title may be called as the ‘‘White-Collar Crime Penalty Enhancement Act of 2002’’. This title includes amendments to sentencing guidelines relating to certain white collar crimes and also recommended penalties and punishments for attempts and conspiracies to commit criminal fraud offenses including mail and wire fraud, violation of employee retirement income security act. This act also sees Failure of corporate officers to certify financial reports as criminal offense.
10. Corporate Tax Returns:
This title defines the sense of the Senate that the chief executive officer of a corporation should sign the Federal income tax return of a corporation.
11. Corporate Fraud Accountability :
This title is also called the ‘‘Corporate Fraud Accountability Act of 2002’’. This title has a section that gives temporary freezing authority to Securities and Exchange Commission. It also includes amendments to federal sentencing guidelines and authority of commission to prohibit person to serving as officers or directors. Increased...