What is the Sarbanes-Oxley Act?
The Sarbanes-Oxley Act (also known as the “SOX Act”) is a federal law that was passed in 2002. It was created to protect investors from fraudulent and unethical practices by corporations in the United States. The law is named after two US senators; Paul Sarbanes and Michael Oxley. The SOX Act requires public companies to establish internal controls and procedures for financial reporting. It also requires those companies to disclose material information about their financial condition. Additionally, the SOX Act requires that CEOs and CFOs certify the accuracy of their financial reports. The primary purpose of the SOX Act is to protect investors by ensuring that corporations are providing accurate and truthful financial information to shareholders. It also works to reduce corporate fraud and improve the accuracy of financial statements. In addition, the SOX Act requires disclosures of information related to corporate governance, executive compensation, and corporate code of ethics. In California, the SOX Act applies to any publicly traded company that is registered with the Securities and Exchange Commission (SEC). Companies that are registered with the SEC in California must comply with the SOX Act and submit their financial reports to the SEC for review. The SOX Act has been very effective in preventing corporate fraud and ensuring the accuracy of financial statements. It has helped to create a fair, transparent, and efficient market for investors in California and throughout the United States.
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