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Explain the purpose of Sarbanes Oxley Act of 2002

Explain the purpose of Sarbanes Oxley Act of 2002

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The Sarbans- Oxley Act of (SOX) is an act passed by U.S. Congress in to protect investors from the possibility of fradulent accounting activities by corporations. The Sarbanes Oxley Act mandated strict reforms to improve financial disclosure from corporations and prevent accounting fraud.

The main purpose of Sarbanes oxley act is to ensure that the corporate sector works with transparency and provide full disclosure of information as and when required. The transparency purpose of the SOX is fulfill by ensuring real time disclosure of information, the adherance to guidelines of the GAAP, Full financial detail being made available of all the transactions not maintioned in balance sheet. This purpose is SOX Act is also fulfilled by an expanded disclosure of financial & non- financial control measures in force in every Co. Similarly, public certification of these internal Controls and financial measures also help fulfill the purpose of SOX.

ekkarill92 answered 1 year ago
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