| Sarbanes Oxley Act falls under 'Corporate and | | | | the external auditors to set new standards of |
| Auditing Accountability, Responsibility, and | | | | governance. This act also issues accounting standards |
| Transparency Act' or 'CAARTA' act which was | | | | and oversees public accounting firms. |
| passed by the US Senate Banking Committee with | | | | With the increase of regulatory norms, more and more |
| the support of President Bush. This act was passed to | | | | companies are coming under the scrutiny of Federal |
| strengthen corporate governance and improve | | | | government. Those companies that specially obtain |
| investor confidence. Sarbanes Oxley Act ensured the | | | | lists and store personal information come under special |
| accuracy and reliability of disclosures from the | | | | scrutiny of Sarbanes Oxley Act. Lately, there had |
| corporate world. This came into force to avoid any | | | | been review stating that Sarbanes Oxley Act has |
| financial scandals from corporate giants. | | | | been too stringent on the companies. The most talked |
| Sarbanes Oxley Act is more often known as SOX or | | | | about section of the Sarbanes Oxley Act is the |
| Sarbox but is actually officially termed as Public | | | | Section 404 which seeks to enhance reliability of |
| Company Accounting Reform and Investor Protection | | | | internals controls over financial reporting. These |
| Act of 2002. It is the single most important piece of | | | | tightened internal control implemented as a result of |
| legislation that affects the corporate governance, | | | | Sarbanes Oxley Act has lead strains on companies as |
| financial disclosures and the practice of public | | | | well as the accounting firms. |
| accounting. Sarbanes Oxley Act prevents the large | | | | A proper regulatory framework with more stringent |
| corporate giants to commit and financial frauds. This | | | | rules and a company with proper internal regulatory |
| act also punished such corporate that showcase | | | | body delivers the most accurate and transparent |
| irregularities in their financial accountings. After the | | | | financial reporting. This law is administered by |
| Sarbanes Oxley Act came into affect is strengthened | | | | Securities and Exchange Commission. This body sets |
| investor confidence as this law bring the defaulters to | | | | rules and deadlines for the compliance and published |
| justice and protects the interest of workers and | | | | rules on the requirements. |
| shareholders. | | | | The three rules of Sarbanes Oxley Act regulate the |
| According the Sarbanes Oxley Act the large | | | | management of electronic records. The first rule refers |
| companies need to meet the financial reporting and | | | | to the falsification, destruction and alteration of records. |
| certification mandates for any year end financial | | | | The second rule states the retention of records by |
| statements. This act is organized into 11 titles but in | | | | any company so as to how long the records should |
| actual case only subset of these titles relate to the | | | | be stored. The third rule refers to the type of business |
| compliance to the complete law. | | | | records that need to be stored. |
| Sarbanes Oxley Act established new standards for | | | | A total comprehensive study of the Sarbanes Oxley |
| corporate boards and audit committees. This law | | | | Act and its implementation by the corporate bodies |
| implements criminal penalties on large corporate | | | | deliver the most transparent and factual financial |
| companies for defaulting and sets new accountability | | | | records for the company. |
| standards. Sarbanes Oxley Act gives more freedom | | | | |