Accounting All-in-One For Dummies, with Online Practice, 2nd Edition

Chapter 1

Mulling Over Sarbanes-Oxley Regulation

IN THIS CHAPTER

Summarizing 70 years of securities law

Figuring out which companies must comply with SOX

Complying with enhanced reporting requirements under SOX

The Sarbanes-Oxley Act (SOX), which passed in 2002, is the most far-reaching attempt to protect investors since Franklin Delano Roosevelt’s Securities Act of 1933 following the Great Depression. Like the New Deal securities laws of the 1930s, SOX comes on the heels of high-profile scandals at large corporations that caused significant harm to investors. It signals a new era in the relationship among business, government, and the investing public.

SOX is a broad piece of legislation that the Securities and Exchange Commission (SEC) is in charge of administering. It administers this legislation by passing specific rules for companies, audit firms, and stock exchanges to follow. The SEC has issued many comprehensive rules that provide much of the guidance that companies need. These rules help to clearly spell out the requirements of SOX.

This chapter covers the rules and gives you an overview of securities law and the important historical context of SOX. Understanding the objectives ...