This article presents some explanations about the Sarbanes-Oxley of 2002 seven years after its promulgation by the United States of America.

As a result of the recent economic conduct of some person (entrepreneur or accountant) or company (such as Enron or WorldCom), the United States of America realized the need to enact a new federal legislation: the Sarbanes-Oxley, supervised by the Public Enterprise Accounting Oversight Board. This law prohibits many transactions; including the sale of shares when there is a lock-up period or loans from the company to executives. Tea Sarbanes-Oxley it has the same ultimate goal as the Securities and Exchange Commission (SEC), which was established a few years earlier. That said, having public support is a sine qua non for Sarbanes-Oxley to be effective, and then Congress will act accordingly.

Even if Enron’s fallout for investors remains very large (we’re talking billions of dollars), and governance reform was inevitable, post-Enron reform stalled in Congress. However, there was strong lobbying to continue post-Enron reform. Several politicians had mentioned that intervening would create a lack of confidence in investors, contrary to the principle of the free market. On the other hand, those same politicians transformed their ideas when the media got involved. Sarbanes-Oxley It is the effect of these political changes that initially went against it.

Tea Sarbanes-Oxley places great importance on the quality and independence of an audit by increasing the authority of the audit committee on the Board. It also reflects its importance due to the fact that each member must be independent (by not receiving some benefits from other firms or companies). This will also strengthen the independence of the accountant. The price of audits will increase, but the benefits are improved. Tea Sarbanes-Oxley it requires even more, it requires your CEO and CFO to certify every annual or quarterly report filed based on their knowledge. This will make the CEO or CFO more accountable and hold them accountable if such statements turn out to be false. He too Act requires disclosure of all off-balance sheet transactions. Let’s not forget that a business judgment rule will not be construed as a false statement. Without a business judgment rule, a businessman would be really reluctant to serve on an executive committee in any company. Indeed, the object of the Act it is to punish fraudulent business decisions, not those made in good faith. The way to enforce such sentence is in the Sarbanes-Oxley by allowing the power of control that is granted to the Board.

As mentioned earlier, Sarbanes-Oxley created an Oversight Board that has different tasks, including setting standards for auditors, inspecting public accounting firms, imposing sanctions, etc. The composition of such Boards reflects their independence (where only 2 out of 5 members may be current or former Certified Public Accountants). However, since Board leadership is important, some political issues arise when it comes time to appoint a Board President. However the Sarbanes-Oxley today it is well implemented.