A succession of corporate scandals has rocked investor confidence both in the US and in Europe. In the US the government responded with a critical piece of legislation affecting corporate governance, financial disclosure and the practice of public accounting, the Sarbanes-Oxley Act.
Overview
The Sarbanes-Oxley Act, signed into law by President George W. Bush in July 2002 applies to public companies in the US and those serving the companies, such as audit committees, auditors and attorneys. It also affects foreign firms with secondary listings on the New York Stock Exchange. The Act’s stated purpose is “to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes”. [1] The Act’s most relevant aspects are summarised below.
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