The Sarbanes-Oxley Act of 2002

Question

Quizplus · Accepted Answer

The Sarbanes-Oxley Act of 2002 requires CEO and CFOs of all large companies to personally certify their firms' financial statements, making them accountable for accuracy and completeness. The act was passed in the aftermath of the Enron and WorldCom financial scandals to improve corporate transparency and prevent financial fraud. Choice A is incorrect because the SEC was established in 1934. Choice C is incorrect because the act does not define ethical behavior, although it does require companies to establish codes of ethics for their executives. Choice D is incorrect because the act does not mandate that a CFO must be a member of the firm's audit committee, although it does require that at least one member of the committee has financial expertise.