What is the purpose of the Sarbanes-Oxley Act?

The Sarbanes-Oxley Act, also known as SOX, was signed into law in 2002. The purpose of this federal law in Virginia is to protect investors from financial fraud and corporate misuse of funds. The act is named for Paul Sarbanes and Michael Oxley, who were the two US Senators that sponsored the legislation. SOX was designed to improve the accuracy and reliability of financial statements that companies provide to their shareholders. The law requires companies to have more oversight of their financial reporting processes. SOX also establishes stricter standards of ethical conduct for corporate officers and directors. These standards require them to report any potential conflicts of interest, and to make sure that the information they provide is accurate and timely. It also requires companies to regularly assess the effectiveness of their internal controls and to institute effective internal controls. To ensure that companies adhere to these standards, SOX provides for criminal penalties for any persons found to have violated the provisions of the act. It also sets up procedures for whistleblowers who come forward with information about wrongdoing in their companies. By implementing the Sarbanes-Oxley Act in Virginia, businesses are held to a higher standard of ethics and financial responsibility, which helps protect investors from fraud.

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What is the purpose of the Sarbanes-Oxley Act?

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