What is the Sarbanes-Oxley Act?
The Sarbanes-Oxley Act is a federal law passed in 2002 in response to a series of high-profile corporate scandals. The law was created to protect investors from fraudulent accounting practices. The Act requires publicly traded companies to adopt stronger internal controls, increase board oversight, and provide full disclosure of their finances. The Act also requires top executives to certify their company’s financial data, and requires companies to provide an audit opinion from an auditor. The Sarbanes-Oxley Act requires corporate officers to disclose any material conflicts of interest. In addition, it makes it a crime to alter, destroy, or conceal financial documents, or tamper with internal audits. The Act also created the Public Company Accounting Oversight Board, which is responsible for overseeing public companies’ auditing activities. In the state of Virginia, all companies are required to abide by the Sarbanes-Oxley Act. The Virginia State Corporation Commission provides support and resources to help companies understand and comply with the Act. Additionally, the state of Virginia has adopted a Corporate Compliance Program which provides guidance on how to comply with the Sarbanes-Oxley Act and other corporate laws. Overall, the Sarbanes-Oxley Act exists to help protect investors from fraudulent accounting practices and corporate malfeasance. By creating tougher internal controls, increased board oversight, and full financial disclosure, the Act helps to ensure that investors’ interests are protected.
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