The Sarbanes-Oxley Act was introduced in the wake of Enron and other corporate scandals to restore confidence in financial reporting. It imposed sweeping reforms on auditing, corporate governance, and financial accountability in the United States.
SOX created the Public Company Accounting Oversight Board (PCAOB) to oversee auditors and introduced strict internal control requirements. It also made CEOs and CFOs personally responsible for the accuracy of financial statements.
Auditors faced stricter independence rules and companies were required to maintain strong internal audit systems. Non-compliance carried severe penalties, reinforcing the importance of ethics and professional diligence.
The act had far-reaching influence, shaping practices not only in the US but also for multinational companies operating globally. It demonstrated how regulation can restore trust and strengthen financial systems.
