What are the provisions of the Sarbanes-Oxley Act of 2002?

The Sarbanes-Oxley Act of 2002 addressed corporate auditing procedures and officers’ responsibilities. It established or expanded legal requirements for the boards of directors, management firms, and accounting firms of all public companies in the US. Some of its provisions apply to privately held companies as well. Key provisions address the responsibilities of a company’s board of directors, establish criminal penalties for particular offenses, and mandates the Securities and Exchange Commission’s creation of regulations pertaining to compliance with the law.

Expert Answers

An illustration of the letter 'A' in a speech bubbles

The Sarbanes-Oxley Act, often referred to as the SOX Act, was signed into law in 2002. It is named for its sponsors in the US Congress, Senator Paul Sarbanes of Maryland and Representative Michael Oxley of Ohio. In 11 sections, called titles, the law established new legal requirements or expanded existing ones for all publicly held companies in the US and some private ones. These requirements apply to a company’s board of directors, management firms, and accounting firms. Along with identifying specific responsibilities of the board, the law establishes specific criminal penalties that apply to specific offenses. It also requires that the U.S. Securities and Exchange Commission (SEC) create a set of regulations regarding the companies’ legal responsibility to comply with the law.

The SOX’s first three titles establish the new Public Company Accounting Oversight Board (PCAOB), establish standards for auditor independence, and mandate corporate senior executives’ responsibility. Titles 4 through 6 require enhanced financial disclosures, define codes of conduct and reporting procedures for analysts, and identify SEC resources and authority regarding censuring or barring professionals.

The seventh title identifies studies and reports that the SEC and Comptroller General must perform. Titles 8 and 9 are concerned with criminal penalties related to corporate fraud and white collar crime; along with recommending stiffer sentencing, they provide whistle-blower protection.

Title 10 requires the company CEO to sign its tax return. The eleventh and final title, concerned with corporate fraud accountability, identifies accounting fraud as criminal activity and specifies related penalties and sentences.

Last Updated by eNotes Editorial on

We’ll help your grades soar

Start your 48-hour free trial and unlock all the summaries, Q&A, and analyses you need to get better grades now.

  • 30,000+ book summaries
  • 20% study tools discount
  • Ad-free content
  • PDF downloads
  • 300,000+ answers
  • 5-star customer support
Start your 48-Hour Free Trial