What is the purpose of the Sarbanes-Oxley Act?

The Sarbanes-Oxley Act (also known as SOX) was created in 2002 in response to the financial scandal involving Enron Corporation. It is a federal law that sets standards for public companies to follow in order to protect investors from fraudulent activities. SOX was created to increase corporate responsibility and to reduce financial fraud. It also enforces harsher punishments for individuals found guilty of falsifying corporate financials. It requires companies to strengthen their internal safeguards and procedures to prevent fraud. SOX requires corporate officers to certify the accuracy of corporate financials, and it strengthens the independence of corporate auditors. The main purpose of SOX is to protect the public from financial fraud and to create a more honest and reliable corporate environment. It encourages better corporate governance, and it establishes rules and regulations to prevent accounting fraud. SOX also requires companies to disclose information about their financials, as well as any risks associated with their activities. Overall, the Sarbanes-Oxley Act was designed to increase corporate responsibility and to provide investors with more transparent and reliable information. It has helped to restore public confidence in corporate governance and to improve the accuracy of financial records. SOX is considered one of the most important pieces of financial reform legislation in the US.

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What is the purpose of the Sarbanes-Oxley Act?

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