Sarbanes-Oxley Act
A 2002 U.S. law enhancing corporate governance, financial disclosures, and accountability in response to major accounting scandals, requiring strict internal controls.
Sarbanes-Oxley Act
A U.S. federal law enacted in 2002 that established new or expanded requirements for all U.S. public company boards, management, and public accounting firms, including provisions related to corporate governance, internal control assessment, and enhanced financial disclosure.
For instance, under SOX Section 404, a public company must include in its annual report an assessment of internal controls over financial reporting, along with an attestation by its auditor, increasing accountability for financial reporting accuracy.
The Act was passed in response to major corporate and accounting scandals including Enron and WorldCom. It created the Public Company Accounting Oversight Board to oversee auditors, strengthened auditor independence requirements, enhanced corporate responsibility, and increased financial disclosure requirements.