The Sarbanes-Oxley Act was passed in 2002 by Congress in light of many large scandals that involved various corporations; primarily on acts of fraud. SOX, as it is abbreviated, is an absolutely mandatory piece of legislation for any business, no matter the size of it.(“The Sarbanes-Oxley Act 2002,” n.d.) To preference, the Sarbanes-Oxley Act is consisted of approximately 11 titles, though the most important sections of the entire piece of legislation are sections 302, 401, 404, 409, 802, and 906. In each of these sections, the Sarbanes-Oxley Act lays out vital groundwork for what corporations and business can, and cannot do in order to be incompliance with said piece of legislation. The Sarbanes-Oxley Act is, for obvious reasons, geared towards the auditing and internal controls of any given company. Prior to the passing of Sarbanes-Oxley, corporations of any size could get away with various things because they were not legally obligated to disclose certain information when they released their reports to the public and to their investors. However, with the passing of Sarbanes-Oxley, it is required …show more content…
For example, with the coming of Sarbanes-Oxley, a company’s management team’s level of responsibility has increased greatly. A top level management team must certify the accuracy of their financial reports prior to their release. (Blokhin, 2015) It is important to note, however, that there is a penalty if a top management team does not certify the accuracy of previously mentioned financial reports. If they knowingly certify the financial statements that are not accurate whatsoever, or falsify them in any form, they face up to 20 years in prison. This is a benefit of Sarbanes-Oxley, due to the fact that it can easily dissuade individuals from allowing false financial reports from being