What are the restrictions imposed by the Sarbanes-Oxley Act?

The Sarbanes-Oxley Act is a federal law enacted in 2002 in response to accounting scandals at major companies like Enron and WorldCom. This law is designed to protect investors by increasing accountability and transparency in corporate financial reporting. The Act imposes specific restrictions on companies, their auditors, and their directors and officers. For example, it requires publicly traded companies to adopt stricter internal controls and provide more accurate financial information. It also requires that independent auditors assess the accuracy of the information provided by the company and that they report any significant issues found. The Act also requires that CEOs and CFOs of publicly traded companies certify the accuracy of the financial reports given to shareholders and the SEC. Additionally, the Act prohibits accounting firms from providing non-audit services to any company they audit. This is meant to reduce conflicts of interest and make sure the auditors remain independent. Furthermore, the Act makes it illegal for company officers and employees to trade on insider information or to commit insider trading. It is also illegal for companies to offer financial incentives to auditors to induce them to alter their opinion or ignore certain issues. In conclusion, the Sarbanes-Oxley Act has imposed a number of restrictions on companies, their auditors, and their directors and officers in an effort to increase accountability and transparency in corporate financial reporting. These restrictions are designed to protect investors from fraud and other unethical practices.

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What are the restrictions imposed by the Sarbanes-Oxley Act?

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