Editing Sarbanes–Oxley Act (section)

==Background==
In 2002, Sarbanes–Oxley was named after bill sponsors U.S. Senator [[Paul Sarbanes]] ([[Democratic Party (United States)|D]]-[[Maryland|MD]]) and U.S. Representative [[Michael G. Oxley]] ([[Republican Party (United States)|R]]-[[Ohio|OH]]). To be "SOX compliant," top management must individually certify the accuracy of financial information. In addition, penalties for fraudulent financial activity are much more severe. The act increased the oversight role of boards of directors and the independence of the outside auditors who review the accuracy of corporate financial statements.<ref>{{cite book|title=Financial Accounting, 6th Edition|first1=Paul D.|last1=Kimmel|first2=Jerry J.|last2=Weygandt|first3=Donald E.|last3=Kieso|year=2011|publisher=[[John Wiley & Sons|Wiley]]|isbn=978-0-470-53477-9}}</ref>

The bill was enacted as a reaction to a number of major [[accounting scandals|corporate and accounting scandals]], including those affecting [[Enron]], [[Tyco International]], [[Adelphia Communications Corporation|Adelphia]], [[Peregrine Systems]], and [[WorldCom]]. These scandals cost investors billions of dollars when the share prices of affected companies collapsed, and shook public confidence in the US [[capital market|securities markets]].<ref>{{Cite book|last1=Behl|first1=Ramesh|url=https://books.google.com/books?id=wiSgDwAAQBAJ&q=These+scandals+cost+investors+billions+of+dollars+when+the+share+prices+of+affected+companies+collapsed%2C+and+shook+public+confidence+in+the+US+securit&pg=PT1442|title=Management Information Systems|last2=O'Brien|first2=James A.|last3=Marakas|first3=George M.|date=2019-01-10|publisher=McGraw-Hill Education|isbn=978-93-5316-466-9|language=en}}</ref>

The act contains eleven titles, or sections, ranging from additional corporate board responsibilities to criminal penalties, and requires the [[United States Securities and Exchange Commission|Securities and Exchange Commission]] (SEC) to implement rulings on requirements to comply with the law. [[Harvey Pitt]], the 26th chairman of the SEC, led the SEC in the adoption of dozens of rules to implement the Sarbanes–Oxley Act. It created a new, quasi-public agency, the [[Public Company Accounting Oversight Board]] (PCAOB), charged with overseeing, regulating, inspecting, and disciplining accounting firms in their roles as auditors of public companies. The act also covers issues such as [[auditor]] independence, [[corporate governance]], [[internal control]] assessment, and enhanced financial disclosure. The nonprofit arm of [[Financial Executives International]], Financial Executives Research Foundation, completed extensive research studies to help support the foundations of the act.<ref>{{Cite web|url=http://www.secauditor.com/sarbanes.php|title=SEC Auditor - Salberg & Company, P.A. Sarbanes|website=www.secauditor.com|access-date=2020-03-16}}</ref>

The act was approved in the [[United States House of Representatives|House]] by a vote of [https://clerk.house.gov/evs/2002/roll348.xml 423 in favor, 3 opposed, and 8 abstaining] and in the [[United States Senate|Senate]] with a vote of [https://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=107&session=2&vote=00192 99 in favor and 1 abstaining]. President George W. Bush signed it into law, stating it included "the most far-reaching reforms of American business practices since the time of [[Franklin D. Roosevelt]]. The era of low standards and false profits is over; no boardroom in America is above or beyond the law."<ref name="Bumiller2002">{{cite news|first=Elisabeth|last=Bumiller|title=Bush Signs Bill Aimed at Fraud in Corporations|url=https://query.nytimes.com/gst/fullpage.html?res=9C01E0D91E38F932A05754C0A9649C8B63|work=[[The New York Times]]|date=2002-07-31}}</ref>
 
In response to the perception that stricter financial governance laws are needed, SOX-type regulations were subsequently enacted in Canada (2002), Germany (2002), South Africa (2002), France (2003), Australia (2004), India (2005), Japan (2006), Italy (2006), Israel, and Turkey.<ref>Colon, Dina (2005) "[https://scholarlycommons.law.hofstra.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=1129&context=jibl The Foreign Bank Exemption to the Sarbanes-Oxley Prohibition on Loans to Directors and Officers], "Journal of International Business and Law: Vol. 4: Iss. 1, Article 7</ref> (See [[#Similar laws in other countries|Similar laws in other countries]] below.)

Debates continued as of 2007 over the perceived benefits and costs of SOX. Opponents of the bill have claimed it has reduced America's international competitive edge because it has introduced an overly complex regulatory environment into US financial markets. A study commissioned by then New York City Mayor [[Michael Bloomberg]] and New York Senator [[Chuck Schumer]] cited this as one reason America's financial sector is losing market share to other financial centers worldwide.<ref>{{cite web|url=https://www.senate.gov/~schumer/SchumerWebsite/pressroom/special_reports/2007/NY_REPORT%20_FINAL.pdf|author=Mckinsey & Company|work=Schumer Senate website|title=NY REPORT|year=2007|archive-url=https://web.archive.org/web/20090112203324/https://www.senate.gov/~schumer/SchumerWebsite/pressroom/special_reports/2007/NY_REPORT%20_FINAL.pdf|archive-date=January 12, 2009}}</ref> Proponents of the measure said that SOX has been a "godsend" for improving the confidence of fund managers and other investors with regard to the veracity of corporate financial statements.<ref>{{cite web|title=Not Everyone Hates SarbOx|work=BusinessWeek.com|publisher=Bloomberg L.P.|url=http://www.businessweek.com/magazine/content/07_05/b4019053.htm|archive-url=https://web.archive.org/web/20070428122907/http://www.businessweek.com/magazine/content/07_05/b4019053.htm|archive-date=April 28, 2007|date=28 January 2007|access-date=13 March 2014}}</ref>

The 10th anniversary of SOX coincided with the passing of the [[Jumpstart Our Business Startups Act|Jumpstart Our Business Startups (JOBS) Act]], designed to give emerging companies an economic boost, and cutting back on a number of regulatory requirements.<ref name="Feldman">{{cite web|last=Feldman|first=David|title=Summary of JOBS Bill and Update|url=http://www.reversemergerblog.com/2012/03/17/summary-of-jobs-bill-and-update/|access-date=August 27, 2021|archive-url=https://web.archive.org/web/20120324132537/http://www.reversemergerblog.com/2012/03/17/summary-of-jobs-bill-and-update/|archive-date=March 24, 2012}}</ref>