The Sarbanes-Oxley Act of 2002 is an important piece of legislation that was designed to protect shareholders from fraudulent financial reporting by publicly traded companies. The legislation set out stringent rules and regulations that must be adhered to by public companies in order to protect investors. It also created an independent oversight board to hold companies accountable for their financial reporting practices.
What Does The Act Do?
The act requires publicly traded companies to establish a system of internal controls that are designed to detect and prevent fraud. It also requires companies to disclose any irregularities in their financial statements, and to provide evidence of the effectiveness of their internal controls. Additionally, the act requires the company’s external auditors to attest to the accuracy of the financial statements.
What Are The Benefits Of The Sarbanes-Oxley Act?
The Sarbanes-Oxley Act has provided a number of benefits for investors. By establishing stricter requirements for corporate accountability and transparency, the act has helped to restore investor confidence in the stock markets. Also, by providing an independent oversight board to ensure that companies comply with the rules, the act has helped to protect investors from fraudulent financial reporting.
The following statements are true about the Sarbanes-Oxley Act:
- It requires publicly traded companies to establish a system of internal controls that are designed to detect and prevent fraud.
- It requires companies to disclose any irregularities in their financial statements.
- It requires the company’s external auditors to attest to the accuracy of the financial statements.
- It provides an independent oversight board to ensure that companies comply with the rules.
- It has helped to restore investor confidence in the stock markets.