SOX
Sarbanes-Oxley Act
US federal law establishing corporate accountability and financial reporting standards for public companies.
SOX was enacted in 2002 following major corporate scandals including Enron and WorldCom to restore investor confidence in financial markets. The Act requires CEO and CFO certification of financial statements, establishes internal control requirements, and mandates independent auditor oversight. Section 404 requires management assessment and auditor attestation of internal controls over financial reporting. SOX created the Public Company Accounting Oversight Board (PCAOB) to regulate auditors and establish auditing standards. The Act includes whistleblower protections, restrictions on auditor services, and enhanced disclosure requirements. SOX compliance requires significant internal control frameworks, documentation, and testing procedures. The regulation applies to all US public companies and foreign companies listed on US exchanges.
Example
CEO/CFO certifications, Section 404 internal control testing, PCAOB auditor inspections