Address The Following Sox Enactment

The US government in 2002 under the leadership of President Bush passed the Sarbanes Oxley (SOX) Act. It was passed in order to protect the investors from the possibility of fraudulent trade and accounting practices done by corporations. It laid strict reforms to improve financial disclosures from corporations and prevent accounting frauds. It was enacted because of various accounting scandals like Enron, Tyco, WorldCom, etc. in the year 2000. These scandals shocked the entire world and had adverse effects on the faith of the shareholders. These scandals paved way for reformation in the regulatory standards (Navran, 2003). The Act is a piece of legislation created to safeguard the investors from the accounting fraud. It specifically caters to the public corporations who trade on stock markets. The Act is a deliberate attempt to make some mandatory requirements with respect to how the companies should make certain financial declarations. It makes sure that there is strict vigilance on disclosure of all the financial information that is of importance to the investors like earnings and profitability. In 2001, the US Congress made attempts to inquire about the problems in the Securities and Exchange Commission. The SEC referred many problems and the government started