Respuesta :
Many of these frauds were perpetrated by the CEOs and other senior officers. In response, Congress enacted the Sarbanes-Oxley Act of 2002.
Why Is the Sarbanes-Oxley Act Important?
Federal legislation known as the Sarbanes-Oxley Act of 2002 imposed stringent financial and auditing standards for publicly traded firms.
To assist shield shareholders, employees, and the general public from accounting mistakes and dishonest financial activities, legislators enacted the legislation. The new set of regulations was held accountable by auditors, accountants, and corporate officers. The Securities and Exchange Act of 1934 and the Investment Advisers Act of 1940, two statutes that the Securities and Exchange Commission (SEC) enforces, were amended and expanded by these rules. The Sarbanes-Oxley Act is enforced by the SEC. The Act primarily focuses on the following areas:
- Increasing the severity of punishment
- Accounting guidelines
- New safeguards
- Company accountability.
What advantages does the Sarbanes-Oxley Act offer?
However, several business leaders agreed that adjustments were needed and believed the Act may encourage better financial procedures that would benefit businesses and their stakeholders.
Indeed, as the law was fully implemented over the following years, even those of those who were first dubious of the Act came to see its advantages.
Supporters of the bill specifically stated that the Act strengthened controls, standardized processes, improved paperwork, strengthened board monitoring helped businesses improve their financial management.
Additionally, studies show that the Act raised investor confidence.
Learn more about the Sarbanes-Oxley Act of 2002 with the help of the given link:
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